Dragon Slaying with Ambiguity: Theory and Experiments

28 Pages Posted: 26 Apr 2015

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: April 24, 2015

Abstract

This paper studies the impact of ambiguity in the best shot and weakest link models of public good provision. The models are first analysed theoretically. Then we conduct experiments to study how ambiguity affects behaviour in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity safe strategy, is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behaviour in games. Subjects tend to choose contributions above (resp. below) the Nash equilibrium in the Best Shot (resp. Weakest Link) model.

Keywords: Public goods; Ambiguity; Choquet expected utility; strategic complements; weakest link; best shot

JEL Classification: C72, C91, D03, D81, H41

Suggested Citation

Kelsey, David and le Roux, Sara, Dragon Slaying with Ambiguity: Theory and Experiments (April 24, 2015). Available at SSRN: https://ssrn.com/abstract=2598786 or http://dx.doi.org/10.2139/ssrn.2598786

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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