Strategic Uncertainty and Probabilistic Sophistication

ISER DP No. 1117 (2021)

44 Pages Posted: 19 Mar 2021 Last revised: 7 Apr 2021

See all articles by Masaki Aoyagi

Masaki Aoyagi

Osaka University - Institute of Social and Economic Research (ISER)

Takehito Masuda

Shinshu University

Naoko Nishimura

Ritsumeikan University

Date Written: February 2, 2021


This paper uses laboratory experiments to study subjects' assessment of uncertainty resulting from strategic and non-strategic decisions of other players. Non-strategic events are defined by the colors of balls drawn from urns, whereas strategic events are defined by the action choice in Stag Hunt (SH) and Prisoners' Dilemma (PD) games. We elicit subjects' matching probabilities and examine if they satisfy the law of probability including monotonicity and additivity. Violations from the law are observed for both uncertainty sources, but are more substantial for strategic uncertainty. In particular, we observe a coordination fallacy, a violation of monotonicity whereby the probability weight placed on a symmetric coordination profile of the games exceeds that placed on the corresponding action choice. The violation is found to be severer for an efficient coordination profile.

Keywords: matching probability, ambiguity, uncertainty, coordination, conjunction

JEL Classification: C91, D01, D81, D91

Suggested Citation

Aoyagi, Masaki and Masuda, Takehito and Nishimura, Naoko, Strategic Uncertainty and Probabilistic Sophistication (February 2, 2021). ISER DP No. 1117 (2021), Available at SSRN: or

Masaki Aoyagi (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
+81 6 6879 8557 (Phone)
+81 6 6878 2766 (Fax)

Takehito Masuda

Shinshu University ( email )

Nagano, 390-8621

Naoko Nishimura

Ritsumeikan University ( email )

Kusatsu, Shiga 525-8577

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