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Ambiguity-dominance in games

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  • Evan M. Calford

Abstract

This paper introduces ambiguity-dominance as a novel equilibrium selection procedure that, in 2x2 games, unifies risk-dominance and payoffdominance as special cases. Ambiguity-dominance provides an intuitive answer to the question "Which equilibrium is most robust to ambiguous beliefs about the behavior of other players?" and is defined for all finite normal form games. Ambiguity-dominance is parametrized by players' ambiguity preference and, using data from three recent experiments we find, on aggregate, ambiguity loving coupled with substantial subject-level heterogeneity.

Suggested Citation

  • Evan M. Calford, 2026. "Ambiguity-dominance in games," ANU Working Papers in Economics and Econometrics 2025-707, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2025-707
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    File URL: https://cbe.anu.edu.au/researchpapers/econ/wp707.pdf
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    Keywords

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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