Strategic Problems with Risky Prospects

Authors

Alessandro Sontuoso, Chapman UniversityFollow
Cristina Bicchieri, University of PennsylvaniaFollow
Alexander Funcke, University of PennsylvaniaFollow
Einav Hart, University of PennsylvaniaFollow

Document Type

Article

Publication Date

6-23-2020

Abstract

We study “hypothetical reasoning” in games where the impact of risky prospects (chance moves with commonly-known conditional probabilities) is compounded by strategic uncertainty. We embed such games in an environment that permits us to verify if risk-taking behavior is affected by information that reduces the extent of strategic uncertainty. We then test some implications of expected utility theory, while making minimal assumptions about individuals’ (risk or ambiguity) attitudes. Results indicate an effect of the information on behavior: this effect is triggered in some cases by a belief-revision about others’ actions, and in other cases by a reversal in risk preferences.

Comments

ESI Working Paper 20-23

Recommended Citation

Sontuoso, A., Bicchieri, C., Funcke, A. & Hart, E. (2020). Strategic problems with risky prospects. ESI Working Paper 20-23. https://digitalcommons.chapman.edu/esi_working_papers/318/