Extensive Form Games with Uncertainty Averse Players
Existing equilibrium concepts for games make use of the subjective expected utility model axiomatized by Savage (1954) to represent players' preferences. Accordingly, each player's beliefs about the strategies played by opponents are represented by a probability measure. Motivated by the Ellsberg Paradox and relevant experimental findings demonstrating that the beliefs of a decision maker may not be representable by a probability measure, this paper generalizes Nash Equilibrium in finite extensive form games to allow for preferences conforming to the multiple priors model developed in Gilboa and Schmeidler (1989). The implications of this generalization for strategy choices and welfare are studied.
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- Machina, Mark J & Schmeidler, David, 1992.
"A More Robust Definition of Subjective Probability,"
Econometric Society, vol. 60(4), pages 745-80, July.
- Mark J. Machina & David Schmeidler, 1990. "A More Robust Definition of Subjective Probability," Discussion Paper Serie A 306, University of Bonn, Germany.
- Machina,Mark & Schmeidler,David, 1991. "A more robust definition of subjective probability," Discussion Paper Serie A 365, University of Bonn, Germany.
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- Itzhak Gilboa & David Scheidler, 1993.
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- Schmeidler, David, 1989.
"Subjective Probability and Expected Utility without Additivity,"
Econometric Society, vol. 57(3), pages 571-87, May.
- David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
- Karni, E. & Safra, Z., 1988. "Ascending Bid Auctions With Behaviorally Consistent Bidders," Papers 1-88, Tel Aviv.
- Machina, Mark J, 1989. "Dynamic Consistency and Non-expected Utility Models of Choice under Uncertainty," Journal of Economic Literature, American Economic Association, vol. 27(4), pages 1622-68, December.
- Kin Chung Lo, 1999.
"Nash equilibrium without mutual knowledge of rationality,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(3), pages 621-633.
- Kin Chung Lo, 1995. "Nash Equilibrium without Mutual Knowledge of Rationality," Working Papers ecpap-95-04, University of Toronto, Department of Economics.
- Camerer, Colin & Weber, Martin, 1992. "Recent Developments in Modeling Preferences: Uncertainty and Ambiguity," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 325-70, October.
- Daniel Ellsberg, 2000. "Risk, Ambiguity and the Savage Axioms," Levine's Working Paper Archive 7605, David K. Levine.
- Martin J Osborne & Ariel Rubinstein, 2009.
"A Course in Game Theory,"
814577000000000225, UCLA Department of Economics.
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