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Mixed strategies and preference for randomization in games with ambiguity averse agents

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  • Evan M. Calford

Abstract

We study the use of mixed strategies in games by ambiguity averse agents with a preference for randomization. Applying the decision theoretic model of Saito (2015) to games, we establish that the set of rationalizable strategies grows larger as preferences for randomization weaken. An agent’s preference for randomization is partially observable: given the behavior of an agent in a game, we can determine an upper bound on the strength of randomization preferences for that agent. Notably, data in previous experiments on ambiguity aversion in games is not consistent with a maximal preference for randomization for approximately 30% of subjects.

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  • Evan M. Calford, 2020. "Mixed strategies and preference for randomization in games with ambiguity averse agents," ANU Working Papers in Economics and Econometrics 2020-675, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2020-675
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp675.pdf
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    Cited by:

    1. Calford, Evan M., 2020. "Uncertainty aversion in game theory: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 720-734.
    2. Cabrales, Antonio & Brañas, Pablo & Espinosa, María Paz & Jorrat, Diego, 2022. "The effect of ambiguity in strategic environments: an experiment," CEPR Discussion Papers 17584, C.E.P.R. Discussion Papers.
    3. Fabian Bopp & Sara le Roux, 2023. "Social learning under ambiguity - an experimental study," Working Papers Dissertations 110, Paderborn University, Faculty of Business Administration and Economics.

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    More about this item

    Keywords

    Ambiguity Aversion; Mixed Strategies; Game Theory;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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