Ambiguity and Social Interaction

Burkhard Schipper and David Kelsey

No 56, Working Papers from University of California, Davis, Department of Economics

Abstract: We present a non-technical account of ambiguity in strategic games and show how it may be applied to economics and social sciences. Optimistic and pessimistic responses to ambiguity are formally modelled. We show that pessimism has the effect of increasing (decreasing) equilibrium prices under Cournot (Bertrand) competition. In addition the effects of ambiguity on peace-making are examined. It is shown that ambiguity may select equilibria in coordination games with multiple equilibria. Some comparative statics results are derived for the impact of ambiguity in games with strategic complements.

Keywords: Ambiguity; Optimism; Pessimism; Strategic Games; Oligopoly; Strategic Delegation; Peace-making; Strategic Complements; Choquet Expected Utility (search for similar items in EconPapers)
JEL-codes: C72 D43 D62 D81 (search for similar items in EconPapers)
Pages: 33
Date: 2005-11-13
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Ambiguity and social interaction (2009)
Working Paper: Ambiguity and Social Interaction (2007)
Working Paper: Ambiguity and Social Interaction (2005)
Working Paper: Ambiguity and Social Interaction (2005)
Working Paper: Ambiguity and social interaction (2003)
Working Paper: Ambiguity and Social Interaction (2003)
Working Paper: Ambiguity and Social Interaction (2003)
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