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Uncertainty Aversion in Game Theory: Experimental Evidence

Listed author(s):
  • Evan Calford

This paper experimentally investigates the role of uncertainty aversion in normal form games. Theoretically, risk aversion will a ect the utility value assigned to realized outcomes while ambiguity aversion a ects the evaluation of strategies. In practice, however, utilities over outcomes are unobservable and the e ects of risk and ambiguity are confounded. This paper introduces a novel methodology for identifying the e ects of risk and ambiguity preferences on behavior in games in a laboratory environment. Furthermore, we also separate the e ects of a subject's beliefs over her opponent's preferences from the e ects of her own preferences. The results support the conjecture that both preferences over uncertainty and beliefs over opponent's preferences a ect behavior in normal form games.

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File URL: http://www.krannert.purdue.edu/programs/phd/Working-papers-series/2017/1291-Evan-Calford-AGT.pdf
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Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1291.

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Length: 39 pages
Date of creation: Apr 2017
Handle: RePEc:pur:prukra:1291
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Web page: http://www.krannert.purdue.edu/programs/phd

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