Granny Versus Game Theorist: Ambiguity in Experimental Games

27 Pages Posted: 29 Sep 2006

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

Burkhard C. Schipper

University of California, Davis - Department of Economics

Date Written: September 26, 2006

Abstract

We report on an experiment in which subjects choose actions in strategic games with either strategic complements or substitutes against a granny, a game theorist or other subjects. The games are selected in order to test predictions on the comparative statics of equilibrium with respect to changes in strategic ambiguity. We find that subjects face higher ambiguity while playing against the granny than playing against the game theorist if we assume that subjects are ambiguity averse. Moreover, under the same assumption, subjects choose more secure actions in games more prone to ambiguity which is in line with the predictions.

Keywords: Knightian uncertainty, Choquet expected utility, equilibrium under ambiguity, strategic uncertainty, experiments

JEL Classification: C70, C72, C90, C91, D80, D81

Suggested Citation

Eichberger, Jürgen and Kelsey, David and Schipper, Burkhard C., Granny Versus Game Theorist: Ambiguity in Experimental Games (September 26, 2006). Available at SSRN: https://ssrn.com/abstract=933141 or http://dx.doi.org/10.2139/ssrn.933141

Jürgen Eichberger

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/

Burkhard C. Schipper (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-6142 (Phone)
530-752-9382 (Fax)

HOME PAGE: http://www.econ.ucdavis.edu/faculty/schipper/

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