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Measuring strategic-uncertainty attitudes

Author

Listed:
  • Lisa Bruttel

    (Universität Potsdam, Department for Economics and Social Sciences, Chair for Economics Markets, Competition, and Institutions - August-Bebel-Str. 89 - 14482 Potsdam, Germany)

  • Muhammed Bulutay

    (Technische Universität Berlin, Chair of Macroeconomics, H 52 - Straße des 17. Juni 135 - 10 623 Berlin, Germany)

  • Camille Cornand

    (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France)

  • Frank Heinemann

    (Technische Universität Berlin, Chair of Macroeconomics, H 52 - Straße des 17. Juni 135 - 10 623 Berlin, Germany)

  • Adam Zylbersztejn

    (Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France; research fellow at Vistula University Warsaw (AFiBV), Warsaw, Poland)

Abstract

Strategic uncertainty is the uncertainty that players face with respect to the purposeful behavior of other players in an interactive decision situation. Our paper develops a new method for measuring strategic-uncertainty attitudes and distinguishing them from risk and ambiguity attitudes. We vary the source of uncertainty (whether strategic or not) across conditions in a ceteris paribus manner. We elicit certainty equivalents of participating in two strategic 2x2 games (a stag-hunt and a market-entry game) as well as certainty equivalents of related lotteries that yield the same possible payoffs with exogenously given probabilities (risk) and lotteries with unknown probabilities (ambiguity). We provide a structural model of uncertainty attitudes that allows us to measure a preference for or an aversion against the source of uncertainty, as well as optimism or pessimism regarding the desired outcome. We document systematic attitudes towards strategic uncertainty that vary across contexts. Under strategic complementarity [substitutability], the majority of participants tend to be pessimistic [optimistic] regarding the desired outcome. However, preferences for the source of uncertainty are distributed around zero.

Suggested Citation

  • Lisa Bruttel & Muhammed Bulutay & Camille Cornand & Frank Heinemann & Adam Zylbersztejn, 2022. "Measuring strategic-uncertainty attitudes," Working Papers 2211, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    • Handle: RePEc:gat:wpaper:2211
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    More about this item

    Keywords

    risk attitudes; ambiguity attitudes; strategic-uncertainty attitudes; stag-hunt game; market-entry game;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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