Knightian games and robustness to ambiguity

Ronald Stauber

Journal of Economic Theory, 2011, vol. 146, issue 1, 248-274

Abstract: This paper introduces a notion of robustness to ambiguous beliefs for Bayesian Nash equilibria. An equilibrium is robust if the corresponding strategies remain approximately optimal for a class of games with ambiguous beliefs that results from an appropriately defined perturbation of the belief structure of the original non-ambiguous belief game. The robustness definition is based on a novel definition of equilibrium for games with ambiguous beliefs that requires equilibrium strategies to be approximate best responses for all measures that define a player's belief. Conditions are derived under which robustness is characterized by a newly defined strategic continuity property, which can be verified without reference to perturbations and corresponding ambiguous belief games.

Keywords: Bayesian; games; Knightian; uncertainty; Ambiguity; Robustness (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:146:y:2011:i:1:p:248-274

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