Strategic Ambiguity and Decision-Making: An Experimental Study

30 Pages Posted: 2 Aug 2016  

David Kelsey

University of Exeter Business School - Department of Economics

Sara le Roux

Oxford Brookes University - Department of Economics

Date Written: July 30, 2016

Abstract

We conducted a set of experiments to compare the effect of ambiguity in single person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We find that ambiguity has the opposite effect in games of strategic substitutes and complements. This confirms a theoretical prediction made by Eichberger and Kelsey (2002).

The experiments also test whether subjects' perception of ambiguity differs when faced by a local opponent as opposed to a foreign one. Our results show that there is little evidence of more influence of ambiguity on behaviour when faced by foreign subjects.

Keywords: Ambiguity; Choquet expected utility; strategic complements; strategic substitutes; Ellsberg urn

JEL Classification: C72, C91, D03, D81

Suggested Citation

Kelsey, David and le Roux, Sara, Strategic Ambiguity and Decision-Making: An Experimental Study (July 30, 2016). Available at SSRN: https://ssrn.com/abstract=2816797

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 )

Wheatley Campus
Oxford, OX33 1HX
United Kingdom

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

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