TY - JOUR
T1 - Incomplete information games with ambiguity averse players
AU - Hanany, Eran
AU - Klibanoff, Peter
AU - Mukerji, Sujoy
N1 - Publisher Copyright:
© 2020, American Economic Association.
PY - 2020/4/1
Y1 - 2020/4/1
N2 - We study incomplete information games with ambiguity averse players. Our focus is on equilibrium concepts satisfying sequential optimality-each player's strategy is optimal at each information set given opponents' strategies. We show sequential optimality, which does not make any explicit assumption on updating, is equivalent to sequential optimality with respect to beliefs updated using a particular generalization of Bayesian updating. Ambiguity aversion expands the set of equilibria compatible with players sharing common ambiguous beliefs. We connect ambiguity aversion with belief robustness. Examples illustrate new strategic behavior, including strategic use of ambiguity, under ambiguity aversion.
AB - We study incomplete information games with ambiguity averse players. Our focus is on equilibrium concepts satisfying sequential optimality-each player's strategy is optimal at each information set given opponents' strategies. We show sequential optimality, which does not make any explicit assumption on updating, is equivalent to sequential optimality with respect to beliefs updated using a particular generalization of Bayesian updating. Ambiguity aversion expands the set of equilibria compatible with players sharing common ambiguous beliefs. We connect ambiguity aversion with belief robustness. Examples illustrate new strategic behavior, including strategic use of ambiguity, under ambiguity aversion.
UR - http://www.scopus.com/inward/record.url?scp=85089269009&partnerID=8YFLogxK
U2 - 10.1257/mic.20180302
DO - 10.1257/mic.20180302
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AN - SCOPUS:85089269009
SN - 1945-7669
VL - 12
SP - 135
EP - 187
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 2
ER -