Ambiguity and Social Interaction

Jürgen Eichberger, David Kelsey and Burkhard Schipper

No 07-19, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

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.

Pages: 34 pages
Date: 2007-06-20
New Economics Papers: this item is included in nep-com, nep-evo, nep-gth, nep-soc and nep-upt
Note: Financial support by ESRC grant ES-000-22-0650 (David) and the DFG, SFB/TR 15 (Burkhard) is gratefully
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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