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Social and strategic ambiguity versus betrayal aversion

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  • Li, Chen
  • Turmunkh, Uyanga
  • Wakker, Peter P.

Abstract

This paper examines the difference between strategic ambiguity as in game theory and ambiguity arising in individual decisions. We identify a new, non-strategic component underlying all strategic ambiguities, called social ambiguity. We recommend controlling for it to better identify strategic causes. Thus, we shed new light on Bohnet and Zeckhauser's betrayal aversion in the trust game. We first show theoretically that, contrary to preceding claims in the literature, ambiguity attitudes can play a role here. We then show experimentally that social ambiguity, rather than betrayal aversion, can explain our empirical findings. Using our new control, we identify the unique effect of strategic ambiguity. Strategic complexity increases ambiguity perception and thus increases people's likelihood insensitivity when making decisions under strategic ambiguity. Our results show the usefulness of controlling for ambiguity attitudes before speculating on strategic factors.

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  • Li, Chen & Turmunkh, Uyanga & Wakker, Peter P., 2020. "Social and strategic ambiguity versus betrayal aversion," Games and Economic Behavior, Elsevier, vol. 123(C), pages 272-287.
  • Handle: RePEc:eee:gamebe:v:123:y:2020:i:c:p:272-287
    DOI: 10.1016/j.geb.2020.07.007
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    2. Lisa Bruttel & Muhammed Bulutay & Camille Cornand & Frank Heinemann & Adam Zylbersztejn, 2023. "Measuring strategic-uncertainty attitudes," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 522-549, July.
    3. Lotito Gianna & Maffioletti Anna & Santoni Michele, 2023. "Testing Source Influence on Ambiguity Reaction: Preference and Insensitivity," Working papers 083, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
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    6. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).

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    More about this item

    Keywords

    Social ambiguity; Betrayal aversion; Trust; Strategic uncertainty;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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