Minimax regret and strategic uncertainty
Ludovic Renou and
Karl Schlag
Journal of Economic Theory, 2010, vol. 145, issue 1, 264-286
Abstract:
This paper introduces a new solution concept, a minimax regret equilibrium, which allows for the possibility that players are uncertain about the rationality and conjectures of their opponents. We provide several applications of our concept. In particular, we consider price-setting environments and show that optimal pricing policy follows a non-degenerate distribution. The induced price dispersion is consistent with experimental and empirical observations (Baye and Morgan (2004) [4]).
Keywords: Minimax; regret; Rationality; Conjectures; Price; dispersion; Auction (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (29)
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Working Paper: Minimax regret and strategic uncertainty (2008) 
Working Paper: Minimax regret and strategic uncertainty (2008) 
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:145:y:2010:i:1:p:264-286
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