Dragon Slaying and Dyke Building - How Does Ambiguity Affect Individual Behaviour?
20 Pages Posted: 6 Sep 2013
Date Written: September 1, 2013
This paper reports experiments conducted to test whether ambiguity affects individual behaviour in games of strategic complements and strategic substitutes. We study subject behaviour in the presence of ambiguity in order to ascertain whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity safe strategy, which is not chosen in a Nash equilibrium, is often chosen by subjects. This gives a strong indication that ambiguity aversion influences subject behaviour in games.
Keywords: Choquet expected utility, strategic complements, strategic substitutes, weakest link games, best shot games
JEL Classification: C72, C91, D03, D81, H41
Suggested Citation: Suggested Citation