Eichberger, Jürgen () (Sonderforschungsbereich 504) Kelsey, David () (Department of Economics, The University of Birmingham) Schipper, Burkhard () (University of California, Davis Department of Economics)
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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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Publisher Info
Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number
03-30.
Length: 45 pages Date of creation: 14 Oct 2003 Date of revision: Handle: RePEc:xrs:sfbmaa:03-30
Note: Research in part supported by ESRC grant no. R000222597. We would like to acknowledge helpful comments on an earlier version of this paper from seminar participants at the Australian National University, the Universities of Alabama, Birmingham, Berlin (Humboldt) and from participants of the meeting of the Royal Economic Society and the European Economic Association. Special thanks go to Sujoy Mukerji who instigated our interest in this topic and to Jeffrey Kline who pointed out a mistake in an earlier version of the paper. We would also like to thank Simon Grant, Wei Pang, Marzia Raybaudi-Massilia, Peter Sinclair and Willy Spanjers for their comments. The usual disclaimer applies. Contact details of provider: Postal: D-68131 Mannheim Phone: (49) (0) 621-292-2547 Fax: (49) (0) 621-292-5594 Email: Web page: http://www.sfb504.uni-mannheim.de/ More information through EDIRC
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.
[Downloadable!]
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,"
MIT Press Books,
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edition 1, volume 1, number 0262650401.
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.
[Downloadable!]
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)
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