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Interactive Ellsberg tasks: An experiment

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  • Dominiak, Adam
  • Duersch, Peter

Abstract

In his Ph.D.-thesis, Ellsberg formulated strong conditions under which his hypothetical tests of SEU theory have to take place – there should be no strategic interaction. Yet, in reality, situations with unknown probabilities often feature strategic interests of others, who may influence the unknown probabilities. Will decision makers see such situations as interactive or not? We construct experimental treatments where subjects make decisions under ambiguity, while also facing strategic motives of others. Payoffs form coordination or zero-sum games. At least a quarter of subjects view the situation as interactive; others behave in line with the predictions of ambiguity models.

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  • Dominiak, Adam & Duersch, Peter, 2019. "Interactive Ellsberg tasks: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 145-157.
    • Handle: RePEc:eee:jeborg:v:161:y:2019:i:c:p:145-157
    DOI: 10.1016/j.jebo.2019.03.005
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    Cited by:

    1. Masaki Aoyagi & Takehito Masuda & Naoko Nishimura, 2021. "Strategic Uncertainty and Probabilistic Sophistication," ISER Discussion Paper 1117, Institute of Social and Economic Research, Osaka University.
    2. 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.
    3. Richard J. Arend, 2020. "Strategic decision-making under ambiguity: a new problem space and a proposed optimization approach," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 1231-1251, November.

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    More about this item

    Keywords

    Ambiguity; Ellsberg task; Ambiguity aversion; Ellsberg conditions; Nash equilibrium;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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