Journal
JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION
Volume 176, Issue -, Pages 720-734Publisher
ELSEVIER
DOI: 10.1016/j.jebo.2020.06.011
Keywords
Ambiguity aversion; Experimental economics; Game theory; Uncertainty preferences
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Funding
- University of British Columbia Faculty of Arts
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This paper studies, using a laboratory experiment, the effects of uncertainty aversion (the union of risk aversion and ambiguity aversion) on behavior in a normal form game. We isolate and identify two components of uncertainty aversion in games: the effect of an agent's own uncertainty preferences and effect of the agent's beliefs regarding their opponent's uncertainty preferences. Uncertainty preferences are correlated with behavior in games. Induced beliefs about the risk preferences of an opponent have a larger effect on strategic behavior than induced beliefs about an opponent's ambiguity preferences, although both components have a significant effect on behavior. The results support the hypothesis that strategic uncertainty is an important determinant of strategic behavior, and that the response to strategic uncertainty is modulated by subject uncertainty attitudes. (C) 2020 The Author(s). Published by Elsevier B.V.
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