An experimental study on the effect of ambiguity in a coordination game

We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity-safe option. We find that this strategy, which is not played in either...

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Bibliographic Details
Published in:Theory and decision 2015-12, Vol.79 (4), p.667-688
Main Authors: Kelsey, David, le Roux, Sara
Format: Article
Language:English
Subjects:
Ambiguity
Analysis
Attitudes
Behavioral/Experimental Economics
Decision theory
Dominance
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Expected utility
Experiments
Finance
Game Theory
Games
Insurance
Management
Operations Research/Decision Theory
Players
Preferences
Probability
Social and Behav. Sciences
Statistics for Business
Strategy
Studies
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Summary:We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity-safe option. We find that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity-aversion influences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-015-9483-2