Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127265
Authors: 
Eichberger, Jürgen
Kelsey, David
Schipper, Burkhard C.
Year of Publication: 
2007
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 443
Abstract: 
We present a non-technical account of ambiguity in strategic games and show how it may be applied to economics and social sciences. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing) equilibrium prices under Cournot (Bertrand) competition. In addition the effects of ambiguity on peace-making are examined. It is shown that ambiguity may select equilibria in coordination games with multiple equilibria. Some comparative statics results are derived for the impact of ambiguity in games with strategic complements.
Subjects: 
Ambiguity
Optimism
Pessimism
Strategic Games
Oligopoly
Strategic Delegation
Peace-making
Strategic Complements
Choquet Expected Utility
JEL: 
C72
D43
D62
D81
Document Type: 
Working Paper

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