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Disambiguation of Ellsberg equilibria in 2x2 normal form games

Author

Listed:
  • Decerf, Benoit

    (Center for Mathematical Economics, Bielefeld University)

  • Riedel, Frank

    (Center for Mathematical Economics, Bielefeld University)

Abstract

Riedel and Sass (2013) study complete information normal form games in which ambiguity averse players use ambiguous randomization strategies, in addition to pure and mixed strategies. The solution concept they propose, the Ellsberg equilibrium, is a coarsening of the classical Nash equilibrium. We provide a foundation of the new equilibrium concept in the spirit of Harsanyi. We prove an extension of the Purification Theorem for 2x2 normal form games. Our result implies that any Ellsberg equilibrium of such game is the limit case of a mixed strategy equilibrium in a disturbed version of the game for which payoffs are ambiguously disturbed.

Suggested Citation

  • Decerf, Benoit & Riedel, Frank, 2016. "Disambiguation of Ellsberg equilibria in 2x2 normal form games," Center for Mathematical Economics Working Papers 554, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:554
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    File URL: https://pub.uni-bielefeld.de/download/2901361/2901363
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    References listed on IDEAS

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    Cited by:

    1. Frank Riedel, 2017. "Uncertain Acts in Games," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 34(4), pages 275-292, December.

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    More about this item

    Keywords

    Knightian uncertainty; Ellsberg games; Ambiguity aversion; Purification; Disambiguation;
    All these keywords.

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