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Ambiguous Actions in Games

22 September 2016 at 12:01 PM - 1:00 PM

Room 207, Campus on Viale Romania, 32

Speaker: Frank Riedel, Bielefeld University

Title: Ambiguous Actions in Games

Abstract: We propose a framework for normal form games where players can use Knightian uncertainty strategically. In such Ellsberg games, ambiguity–averse players may render their actions objectively ambiguous by using devices such as Ellsberg urns, in addition to the standard mixed strategies. While Nash equilibria remain equilibria in the extended game, there arise new Ellsberg equilibria with distinct outcomes, as we illustrate by negotiation games with three players. We characterize Ellsberg equilibria in two–person games with conflicting interests. These equilibria turn out to be consistent with experimental deviations from Nash equilibrium play. We also discuss extensions to dynamic games and a version of Harsanyi’s purification theorem if time permits.