A Framework for Robustness to Ambiguity of Higher-Order Beliefs

Ronald Stauber ()

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: This paper defines simple procedures to construct ambiguous perturbations of belief structures associated to standard type spaces with precise beliefs, based on ambiguous type spaces whose induced belief hierarchies approximate the belief hierarchies corresponding to the initial type space. Two alternative procedures to construct such perturbations are introduced, and are shown to yield a simple and intuitive characterization of convergence of the resulting approximations to the initial unperturbed environment. The perturbations arising from one of these procedures include the set of all finite perturbations as a special case. The introduced perturbations and their convergence properties provide a foundation for the analysis of robustness to ambiguity of various solutions concepts, and for various decision rules under ambiguity.

JEL-codes: C72 D83 (search for similar items in EconPapers)
Pages: 29 Pages
Date: 2013-02
New Economics Papers: this item is included in nep-gth, nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2013-602

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