Strategic uncertainty and probabilistic sophistication

Arbeitspapier

This paper uses laboratory experiments to study subjects' assessment of uncertainty resulting from strategic and non-strategic decisions of other players. Nonstrategic events are defined by the colors of balls drawn from urns, whereas strategic events are defined by the action choice in Stag Hunt (SH) and Prisoners' Dilemma (PD) games. We elicit subjects' matching probabilities and examine if they satisfy the law of probability including monotonicity and additivity. Violations from the law are observed for both uncertainty sources, but are more substantial for strategic uncertainty. In particular, we observe a coordination fallacy, a violation of monotonicity whereby the probability weight placed on a symmetric coordination profile of the games exceeds that placed on the corresponding action choice. The violation is found to be severer for an efficient coordination profile.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 1117

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Microeconomic Behavior: Underlying Principles ; Criteria for Decision-Making under Risk and Uncertainty ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: matching probability ; ambiguity ; uncertainty ; coordination ; conjunction

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aoyagi, Masaki ; Masuda, Takehito ; Nishimura, Naoko
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/234929
• Last update: 10.03.2025, 11:42 AM CET