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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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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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Find related papers by JEL classification:

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

This paper has been announced in the following NEP Reports:

• NEP-ALL-2008-11-25 (All new papers)
• NEP-EXP-2008-11-25 (Experimental Economics)
• NEP-GTH-2008-11-25 (Game Theory)

References

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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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