Dragon Slaying with Ambiguity: Theory and Experiments

This paper studies the impact of ambiguity in the best‐shot and weakest‐link models of public good provision. The models are first analyzed theoretically. Then, we conduct experiments to study how ambiguity affects behavior in these games. We test whether subjects' perception of ambiguity diffe...

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Bibliographic Details
Published inJournal of public economic theory Vol. 19; no. 1; pp. 178 - 197
Main Authors KELSEY, DAVID, LE ROUX, SARA
Format Journal Article
LanguageEnglish
Published Oxford Wiley-Blackwell 01.02.2017
Blackwell Publishing Ltd
Subjects
Economic models
Economic theory
Game theory
Public good
Studies
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ISSN1097-3923
1467-9779
DOI10.1111/jpet.12185

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Summary:This paper studies the impact of ambiguity in the best‐shot and weakest‐link models of public good provision. The models are first analyzed theoretically. Then, we conduct experiments to study how ambiguity affects behavior in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity‐safe strategy is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behavior in games. Subjects tend to choose contributions above (respectively, below) the Nash equilibrium in the best‐shot (respectively, weakest‐link) model.
Bibliography:Financial support from the University of Exeter Business School is gratefully acknowledged. We would like to thank Jürgen Eichberger, Zvi Safra, Scott Mcdonald, Dieter Balkenborg, Miguel Fonseca, and some anonymous referees for their comments and suggestions.
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 14
ISSN:1097-3923
1467-9779
DOI:10.1111/jpet.12185