Robustness to Strategic Uncertainty

Arbeitspapier

In games with continuum strategy sets, we model a player’s uncertainty about another player’s strategy, as an atomless probability distribution over the other player’s strategy set. We call a strategy profile (strictly) robust to strategic uncertainty if it is the limit, as uncertainty vanishes, of some sequence (all sequences) of strategy profiles in which every player’s strategy is optimal under his or her uncertainty about the others. General properties of this robustness criterion are derived and it is shown that it is a refinement of Nash equilibrium when payoff functions are continuous. We apply the criterion to a class of Bertrand competition games. These are discontinuous games that admit a continuum of Nash equilibria. Our robustness criterion selects a unique Nash equilibrium, and this selection agrees with recent experimental findings.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 910

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets
• Subject: Nash equilibrium ; Refinement ; Strategic uncertainty ; Bertrand competition ; Log-concavity ; Entscheidung bei Unsicherheit ; Preiswettbewerb ; Nash-Gleichgewicht ; Nichtkooperatives Spiel ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Andersson, Ola ; Argenton, Cédric ; Weibull, Jörgen W.
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/81528
• Last update: 10.03.2025, 11:41 AM CET