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Economic Theory

, Volume 48, Issue 2–3, pp 377–398 | Cite as

Strategic games beyond expected utility

  • Thomas Jungbauer
  • Klaus Ritzberger
Symposium

Abstract

This paper argues that Nash equilibrium is a solution where all strategic uncertainty has been resolved and, therefore, inappropriate to model situations that involve “ambiguity.” Instead, to capture what players will do in the presence of some strategic uncertainty, takes a solution concept that is closed under best replies. It is shown that such a solution concept, fixed sets under the best reply correspondence, exists for a class of games significantly wider than those games for which generalizations of Nash equilibrium exist. In particular, this solution can do without the expected utility hypothesis.

Keywords

Ambiguity Fixed sets under the best reply correspondence Nash equilibrium Non-expected utility 

JEL Classification

C6 C72 C79 D81 

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Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Institute for Advanced StudiesViennaAustria
  2. 2.Vienna Graduate School of Finance and Institute for Advanced StudiesViennaAustria

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