Arbeitspapier

Ambiguity and Social Interaction

We present a non-technical account of ambiguity in strategic games and show how it may be applied to economics and social sciences. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing) equilibrium prices under Cournot (Bertrand) competition. In addition the effects of ambiguity on peace-making are examined. It is shown that ambiguity may select equilibria in coordination games with multiple equilibria. Some comparative statics results are derived for the impact of ambiguity in games with strategic complements.

Language: Englisch

Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 59

Classification: Wirtschaft
Noncooperative Games
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Externalities
Criteria for Decision-Making under Risk and Uncertainty

Subject: Ambiguity
Optimism
Pessimism
Strategic Games
Oligopoly
Strategic Delegation
Peace-making
Strategic Complements
Choquet Expected Utility

Event: Geistige Schöpfung

(who): Eichberger, Jürgen
Kelsey, David
Schipper, Burkhard C.

Event: Veröffentlichung

(who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)

(where): München

(when): 2005

DOI: doi:10.5282/ubm/epub.13491

Handle: http://hdl.handle.net/10419/94022

URN: urn:nbn:de:bvb:19-epub-13491-0

Last update: 10.03.2025, 11:43 AM CET

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Object type

Arbeitspapier

Associated

Eichberger, Jürgen
Kelsey, David
Schipper, Burkhard C.
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)

Time of origin

2005

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Arbeitspapier