Optimism and pessimism in games

Eichberger, J�rgen; Institut, Alfred Weber; Kelsey, David; Balkenborg, Dieter; Colman, Andrew; Ganguli, Jayant; Grant, Simon; Murty, Sushma; Stepanova, Anna; Tallon, Jean-Marc; Wakker, Peter

Abstract

This paper considers the impact of ambiguity in strategic situations. It extends the existing literature on games with ambiguity-averse players by allowing for optimistic responses to ambiguity. We use the CEU model of ambiguity with a class of capacities introduced by Jaf-fray and Philippe (1997), which allows us to distinguish ambiguity from ambiguity-attitude, and propose a new solution concept, Equilibrium under Ambiguity (EUA), for players who may be characterized by ambiguity-preference. Applying EUA, we study comparative sta-tics of changes in ambiguity-attitude in games with strategic complements. This extends work in Eichberger and Kelsey (2002) on the e¤ects of increasing ambiguity if players are ambiguity averse.

Citation

Eichberger, J., Institut, A. W., Kelsey, D., Balkenborg, D., Colman, A., Ganguli, J., Grant, S., Murty, S., Stepanova, A., Tallon, J.-M., & Wakker, P. (2014). Optimism and pessimism in games. International Economic Review, 55(2), 483-505. https://doi.org/10.1111/iere.12058

• Journal Article Type: Article
• Acceptance Date: Mar 4, 2013
• Online Publication Date: Apr 22, 2014
• Publication Date: 2014-05
• Deposit Date: Jun 22, 2020
• Publicly Available Date: Jun 23, 2020
• Journal: International Economic Review
• Print ISSN: 0020-6598
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 55
• Issue: 2
• Pages: 483-505
• DOI: https://doi.org/10.1111/iere.12058
• Keywords: Ambiguity in games; support; strategic complementarity; optimism; multi- ple equilibria JEL Classi…cation C72; D81
• Public URL: https://nottingham-repository.worktribe.com/output/4699676
• Publisher URL: https://onlinelibrary.wiley.com/doi/epdf/10.1111/iere.12058