Ellsberg Games

50 Pages Posted: 20 Mar 2012 Last revised: 6 Mar 2013

See all articles by Frank Riedel

Frank Riedel

Bielefeld University - Center for Mathematical Economics

Linda Sass

Bielefeld University

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Date Written: February 14, 2013

Abstract

In the standard formulation of game theory, agents use mixed strategies in the form of objective and probabilistically precise devices to conceal their actions. We introduce the larger set of probabilistically imprecise devices and study the consequences for the basic results on normal form games. While Nash equilibria remain equilibria in the extended game, there arise new Ellsberg equilibria with distinct outcomes, as we illustrate by negotiation games with three players. We characterize Ellsberg equilibria in two-person conflict and coordination games. These equilibria turn out to be related to experimental deviations from Nash equilibrium play

Keywords: Knightian Uncertainty in Games, Strategic Ambiguity, Ellsberg Games

JEL Classification: C72, D81

Suggested Citation

Riedel, Frank and Sass, Linda, Ellsberg Games (February 14, 2013). Institute of Mathematical Economics Working Paper No. 452, Available at SSRN: https://ssrn.com/abstract=2026216 or http://dx.doi.org/10.2139/ssrn.2026216

Frank Riedel (Contact Author)

Bielefeld University - Center for Mathematical Economics ( email )

Postfach 10 01 31
Bielefeld, D-33501
Germany

Linda Sass

Bielefeld University ( email )

Universitätsstraße 25
Bielefeld, NRW 33613
Germany

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