Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/244602 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 334
Publisher: 
University of California, Department of Economics, Davis, CA
Abstract: 
We seek an evolutionary explanation for why in some situations humans maintain either optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of their environment. Players in strategic games face Knightian uncertainty about opponents' actions and maximize individually their Choquet expected utility with respect to neo-additive capacities (Chateauneuf, Eichberger, and Grant, 2007) allowing for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents' changes of actions. We focus on sub- and supermodular aggregative games and provide monotone comparative statics w.r.t. optimism/pessimism. With qualifications we show that in finite populations optimistic (resp. pessimistic) complete ignorance is evolutionary stable and yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in these classes of games.
Subjects: 
ambiguity
Knightian uncertainty
Choquet expected utility
neo-additive capacity
Hurwicz criterion
Maximin
Minimax
supermodularity
aggregative games
monotone comparative statics
playing the field
evolution of preferences
JEL: 
C72
C73
D01
D43
D81
L13
Document Type: 
Working Paper

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