An Experimental Study on the Effect of Ambiguity in a Coordination Game

28 Pages Posted: 27 May 2012

See all articles by David Kelsey

David Kelsey

University of Exeter Business School - Department of Economics

Sara le Roux

Oxford Brookes University - Department of Economics

Date Written: May 25, 2012

Abstract

We report some experiments conducted to test whether ambiguity influences behavior in a coordination game. We study the behavior of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity safe option. We find that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity aversion influences behavior in games. While the behavior of the Row Player is consistent with randomizing between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.

Keywords: ambiguity, choquet expected utility, coordination game, Ellsberg urn, experiment

JEL Classification: C72, C91, D03, D81

Suggested Citation

Kelsey, David and le Roux, Sara, An Experimental Study on the Effect of Ambiguity in a Coordination Game (May 25, 2012). Available at SSRN: https://ssrn.com/abstract=2066454 or http://dx.doi.org/10.2139/ssrn.2066454

David Kelsey

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, Devon EX4 4PU
United Kingdom
013 9226 2536 (Phone)

HOME PAGE: http://people.exeter.ac.uk/dk210/

Sara Le Roux (Contact Author)

Oxford Brookes University - Department of Economics ( email )

Oxford Brookes Business School
Headington Campus
Oxford, OX3 0BP
United Kingdom

HOME PAGE: http://saraleroux.weebly.com/

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