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Optimism and Pessimism in Games

Author

Listed:
  • Jurgen Eichberger

    (Alfred Weber Institut, Universitat Heidelberg, Germany)

  • David Kelsey

    (Department of Economics, University of Exeter)

Abstract

This paper considers the impact of ambiguity in strategic situations. It extends the earlier literature by allowing for optimistic responses to ambiguity. Ambiguity is modelled by CEU preferences. We propose a new solution concept for players who may express ambiguity- preference. Then we study comparative statics of changes in ambiguity-attitude in games with strategic complements. This gives a precise statement of the impact of ambiguity on economic behaviour.

Suggested Citation

  • Jurgen Eichberger & David Kelsey, 2009. "Optimism and Pessimism in Games," Discussion Papers 0905, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:0905
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    File URL: https://exetereconomics.github.io/RePEc/dpapers/DP0905.pdf
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    Keywords

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    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

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