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Benevolent and Malevolent Ellsberg Games

Dominiak, Adam ; Duersch, Peter

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Abstract

Traditionally, real experiments testing subjective expected utility theory take for granted that subjects view the Ellsberg task as a one-person decision problem. We challenge this view: Instead of seeing the Ellsberg task as a one-person decision problem, it can be perceived as a two-player game. One player chooses among the bets. The second player determines the distribution of balls in the Ellsberg urn. The Nash equilibrium predictions of this game depend on the payoff of the second player, with the game ranging from a zero-sum one to a coordination game. Meanwhile, the predictions by ambiguity aversion models remain unchanged. Both situations are implemented experimentally and yield different results, in line with the game-theoretic prediction. Additionally, the standard scenario (without explicit mention of how the distribution is determined) leads to results similar to the zero-sum game, suggesting that subjects view the standard Ellsberg experiment as a game against the experimenter.

Item Type: Working paper
Series Name: Discussion Paper Series, University of Heidelberg, Department of Economics
Volume: 0592
Place of Publication: Heidelberg
Date Deposited: 15 May 2015 14:33
Date: May 2015
Number of Pages: 40
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: Ellsberg task, experiment, zero-sum game, coordination game, ambiguity, uncertainty averse preferences
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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