An Experimental Study on the Effect of Ambiguity in a Coordination Game
28 Pages Posted: 27 May 2012
Date Written: May 25, 2012
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: Suggested Citation