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Strategic behavior of non-expected utility players in games with payoff uncertainty

Kauffeldt, T. Florian

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Abstract

This paper investigates whether the strategic behavior of expected utility players differs from that of non-expected utility players in the context of incomplete information games where players can choose mixed strategies. Two conditions are identified where uncertainty-averse non-expected utility players behave differently from expected utility players. These conditions concern the use of mixed strategies and the response to it. It is shown that, if and only if these conditions fail, nonexpected utility players behave as if they were expected utility players. The paper provides conditions, in terms of the payoff structure of a game, which are necessary and sufficient for behavioral differences between expected and non-expected utility players. In this context, games are analyzed that are especially relevant for the design of experiments.

Item Type: Working paper
Series Name: Discussion Paper Series, University of Heidelberg, Department of Economics
Volume: 0614
Place of Publication: Heidelberg
Date Deposited: 22 Apr 2016 08:11
Date: April 2016
Number of Pages: 40
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: Non-expected utility, Incomplete information games,Uncertainty aversion, Mixed strategies, Strategic behavior
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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