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Strategies Under Strategic Uncertainty

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  • Helene Mass

Abstract

I investigate the decision problem of a player in a game of incomplete information who faces uncertainty about the other players’ strategies. I propose a new decision criterion — the rational maximin criterion — which works in two steps. First, I assume common knowledge of rationality and eliminate all strategies which are not rationalizable. Second, I apply the maximin criterion. Using this decision criterion, one can derive predictions about outcomes and recommendations for players facing strategic uncertainty. I analyze applications to first-price auctions, contests, and bilateral trade.

Suggested Citation

  • Helene Mass, 2020. "Strategies Under Strategic Uncertainty," CRC TR 224 Discussion Paper Series crctr224_2020_157, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2020_157
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp157
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    Cited by:

    1. Gretschko, Vitali & Mass, Helene, 2024. "Worst-case equilibria in first-price auctions," Theoretical Economics, Econometric Society, vol. 19(1), January.

    More about this item

    Keywords

    Incomplete Information; Informational Robustness; Rationalizability;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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