Sequential Two-Player Games with Ambiguity

33 Pages Posted: 31 Oct 2004

See all articles by Jürgen Eichberger

Jürgen Eichberger

Heidelberg University - Alfred Weber Institute for Economics

David Kelsey

University of Exeter Business School - Department of Economics

Abstract

If players' beliefs are strictly nonadditive, the Dempster-Shafer updating rule can be used to define beliefs off the equilibrium path. We define an equilibrium concept in sequential two-person games where players update their beliefs with the Dempster-Shafer updating rule. We show that in the limit as uncertainty tends to zero, our equilibrium approximates Bayesian Nash equilibrium. We argue that our equilibrium can be used to define a refinement of Bayesian Nash equilibrium by imposing context-dependent constraints on beliefs under uncertainty.

Suggested Citation

Eichberger, Jürgen and Kelsey, David, Sequential Two-Player Games with Ambiguity. International Economic Review, Vol. 45, No. 4, pp. 1229-1261, November 2004. Available at SSRN: https://ssrn.com/abstract=608486

Jürgen Eichberger (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Heidelberg, D-69117
Germany

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/

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