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Are the Treasures of Game Theory Ambiguous?

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  • Eichberger, Jürgen

    () (Sonderforschungsbereich 504)

  • Kelsey, David

    () (Department of Economics, The University of Birmingham)

Abstract

Goeree & Holt (2001) observe that, for some parameter values, Nash equilibrium provides good predictions for actual behaviour in experiments. For other payoff parameters, however, actual behaviour deviates consistently from that predicted by Nash equilibria. They attribute the robust deviations from Nash equilibrium to actual players’ considering not only marginal gains and losses but also total pay-offs. In this paper, we show that optimistic and pessimistic attitudes towards strategic ambiguity may induce such behaviour.

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Bibliographic Info

Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 08-08.

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Length: 33 pages
Date of creation: 27 May 2008
Date of revision:
Handle: RePEc:xrs:sfbmaa:08-08

Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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References

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  1. Chateauneuf, Alain & Eichberger, Jürgen & Grant, Simon, 2003. "Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities," Sonderforschungsbereich 504 Publications 03-10, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  2. Burkhard C. Schipper & Juergen Eichberger & David Kelsey, 2006. "Granny versus Game Theorist: Ambiguity in Experimental Games," Working Papers 627, University of California, Davis, Department of Economics.
  3. Kin Chung Lo, 1995. "Equilibrium in Beliefs Under Uncertainty," Working Papers ecpap-95-02, University of Toronto, Department of Economics.
  4. Jacob K. Goeree & Charles A. Holt, 2001. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," American Economic Review, American Economic Association, vol. 91(5), pages 1402-1422, December.
  5. Wakker, Peter P, 2001. "Testing and Characterizing Properties of Nonadditive Measures through Violations of the Sure-Thing Principle," Econometrica, Econometric Society, vol. 69(4), pages 1039-59, July.
  6. Philip A. Haile & Ali Hortacsu & Grigory Kosenok, 2003. "On the Empirical Content of Quantal Response Equilibrium," Levine's Bibliography 666156000000000215, UCLA Department of Economics.
  7. Eichberger, Jurgen & Kelsey, David, 2000. "Non-Additive Beliefs and Strategic Equilibria," Games and Economic Behavior, Elsevier, vol. 30(2), pages 183-215, February.
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  11. Eichberger, Jürgen & Kelsey, David & Schipper, Burkhard, 2003. "Ambiguity and Social Interaction," Sonderforschungsbereich 504 Publications 03-30, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  12. Goeree, Jacob & Holt, Charles & Palfrey, Thomas, 2005. "Regular Quantal Response Equilibrium," Working Papers 1219, California Institute of Technology, Division of the Humanities and Social Sciences.
  13. Armin Schmutzler, 2006. "A unified approach to comparative statics puzzles in experiments," Working Papers 0601, University of Zurich, Socioeconomic Institute, revised Nov 2008.
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  15. Jurgen Eichberger & David Kelsey, 2009. "Optimism and Pessimism in Games," Discussion Papers 0905, Exeter University, Department of Economics.
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  20. Ochs Jack, 1995. "Games with Unique, Mixed Strategy Equilibria: An Experimental Study," Games and Economic Behavior, Elsevier, vol. 10(1), pages 202-217, July.
  21. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
  22. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
  23. 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.
  24. David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
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Citations

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Cited by:
  1. Carmela Di Mauro & Massimo Finocchiaro Castro, 2011. "Kindness, confusion, or … ambiguity?," Experimental Economics, Springer, vol. 14(4), pages 611-633, November.
  2. Thomas Jungbauer & Klaus Ritzberger, 2011. "Strategic games beyond expected utility," Economic Theory, Springer, vol. 48(2), pages 377-398, October.
  3. Robert Nau, 2011. "Risk, ambiguity, and state-preference theory," Economic Theory, Springer, vol. 48(2), pages 437-467, October.

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