We examine the impact of ambiguity on economic behaviour. We present a relatively non-technical account of ambiguity and show how it may be applied in economics. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing) equilibrium prices under Cournot (Bertrand) competition. We also examine the effects of ambiguity on peace processes. It is shown that ambiguity can act to select equilibria in coordination games with multiple equilibria. Some comparative statics results are derived for the impact of ambiguity in games with strategic complements.
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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse23_2003.
Length: 48 Date of creation: Jul 2003 Date of revision: Handle: RePEc:bon:bonedp:bgse23_2003
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Jürgen Eichberger & David Kelsey & Burkhard C. Schipper, 2005.
"Ambiguity and Social Interaction,"
Discussion Papers
59, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]
Eichberger, Jurgen & Kelsey, Davis & Schipper, Burkhard, 2007.
"Ambiguity and Social Interaction,"
Working Papers
05-36, University of California at Davis, Department of Economics.
[Downloadable!]
Jürgen Eichberger & David Kelsey & Burkhard C. Schipper, 2007.
"Ambiguity and Social Interaction,"
Working Papers
0443, University of Heidelberg, Department of Economics, revised May 2007.
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D62 - Microeconomics - - Welfare Economics - - - Externalities D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Martin J. Osborne & Ariel Rubinstein, 1994.
"A Course in Game Theory,"
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Other versions:
Chaim Fershtman & Kenneth L Judd, 1984.
"Equilibrium Incentives in Oligopoly,"
Discussion Papers
642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Jürgen Eichberger & David Kelsey, 2004.
"Sequential Two-Player Games With Ambiguity,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1229-1261, November.
[Downloadable!] (restricted)