Cooperation with Strategy-Dependent Uncertainty Attitude

Nicola Dimitri ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: The paper shows that in a Prisoner’s Dilemma Knightian uncertainty, formalised by multiple priors, may entail cooperation at a generalised Nash Equilibrium. The main idea is that players may have an attitude towards uncertainty that depends upon their available strategies. In particular, if players anticipate to be sufficiently more optimistic when choosing to cooperate, than when defecting, then they may indeed cooperate. Though uncommon in economic modelling, choice-dependent uncertainty attitude formalises a behaviour which is well understood and widely accepted by cognitive psychologists, within the theory of Cognitive Dissonance.

Keywords: Cooperation; Cognitive Dissonance; Equilibrium; Games; Uncertainty (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2005-07
New Economics Papers: this item is included in nep-cbe, nep-evo and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:457

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