Granny Versus Game Theorist: Ambiguity in Experimental Games
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.Get Access
We report on an experiment in which subjects choose actions in strategic games with either strategic complements or substitutes against a granny, a game theorist or other subjects. The games are selected in order to test predictions on the comparative statics of equilibrium with respect to changes in strategic ambiguity. We find that subjects face higher ambiguity while playing against the granny than playing against the game theorist if we assume that subjects are ambiguity averse. Moreover, under the same assumption, subjects choose more secure actions in games more prone to ambiguity which is in line with the predictions.
- Bewley, T.F. (1986), Knightian decision theory: Part I, Cowles Foundation Discussion Paper 807.
- Camerer, C. and Karjalainen, R. (1994), Ambiguity-aversion and non-additive beliefs in non-cooperative games: Experimental evidence, in, Munier, B. and Machina, M. (eds.), Models and Experiments in Risk and Rationality, Kluwer Academic Publishers, pp. 325–358.
- Camerer C., Weber M. (1992) Recent developments in modelling preferences: Uncertainty and ambiguity. Journal of Risk and Uncertainty 5: 777–795 CrossRef
- Dow J., da Costa Werlang S.R. (1994) Nash equilibrium under Knightian uncertainty: Breaking down backward induction. Journal of Economic Theory 64, 305–324 CrossRef
- Eichberger J., Kelsey D. (2000) Non-additive beliefs and strategic equilibria. Games and Economic Behavior 30, 183–215 CrossRef
- Eichberger J., Kelsey D. (2002) Strategic complements, substitutes and ambiguity: The implications for public goods. Journal of Economic Theory 106: 436–466 CrossRef
- Eichberger J., Kelsey D. (2005) Optimism and pessimism in games. mimeo., University of Exeter.
- Eichberger J., Kelsey D., Schipper B.C. (2006) Ambiguity and social interaction. mimeo., University of California, Davis
- Epstein L. (1997) Preference, rationalizability and equilibrium. Journal of Economic Theory 73, 1–29 CrossRef
- Fischbacher, U. (1999), z-Tree-Zurich toolbox for readymade economic experiments—experimenter’s manual, mimeo., University of Zurich.
- Gilboa I., Schmeidler D. (1989) Maxmin expected utility with a non-unique prior. Journal of Mathematical Economics 18, 141–153 CrossRef
- Groes E., Jacobson H.J., Sloth B., Tranæs T. (1998) Nash equilibrium with lower probabilities. Theory and Decision 44, 37–66 CrossRef
- Haller H. (2000) Non-additive beliefs in solvable games. Theory and Decision 49, 313–338 CrossRef
- Klibanoff, P. (1996), Uncertainty, decision, and normal form games, mimeo., Northwestern University.
- Lo K.C. (1999) Nash equilibrium without mutual knowledge of rationality. Economic Theory 14, 621–633 CrossRef
- Lo K.C. (1996) Equilibrium in beliefs under uncertainty. Journal of Economic Theory 71, 443–484 CrossRef
- Marinacci M. (2000) Ambiguous games. Games and Economic Behavior 31, 191–219 CrossRef
- Miller G. (1956) The magical number seven, plus or minus two. Psychological Review 63, 81–97 CrossRef
- Mukerji, S. (1997), A theory of play for games in strategic form when rationality is not common knowledge, mimeo.
- Ryan M. (2002) What do uncertainty-averse decision-makers believe?. Economic Theory 20, 47–65 CrossRef
- Schmeidler D. (1989) Subjective probability and expected utility with additivity. Econometrica 57, 571–587 CrossRef
- Granny Versus Game Theorist: Ambiguity in Experimental Games
Theory and Decision
Volume 64, Issue 2-3 , pp 333-362
- Cover Date
- Print ISSN
- Online ISSN
- Springer US
- Additional Links
- Choquet expected utility
- equilibrium under ambiguity
- Knightian uncertainty
- strategic uncertainty
- Industry Sectors
- Author Affiliations
- 1. Wirtschaftstheorie I, Alfred-Weber-Institut für Wirtschaftswissenschaften, Grabengasse 14, 69117, Heidelberg, Germany
- 2. Department of Economics, School of Business and Economics, University of Exeter, Rennes Drive, Exeter, Devon, EX4 4PU, England
- 3. Department of Economics, University of California, Davis, One Shields Avenue, Davis, CA, 95616, USA