title: Confidence, Pessimism and their Impact on Product Differentiation in a Hotelling Model with Demand Location Uncertainty
creator: Kauffeldt, Florian
creator: Wiesenfarth, Boris
subject: 330
subject: 330 Economics
description: We analyze a Hotelling location-then-price duopoly game under demand uncertainty with uniformly distributed consumers in a standard quadratic costs scenario. The novelty of our approach consists of assuming that firms' beliefs are represented by non-extreme-outcome-additive (neo-additive) capacities. We derive firms' subgame-perfect product design decisions under ambiguity. Furthermore, we  investigate the influence of ambiguity and ambiguity attitude on equilibrium product differentiation and contrast our results with an environment of risky firms. We find that the impact of the degree of confidence or ambiguity is particularly significant when it comes to delivering accurate explanations for a wide range of phenomena related to observed product design behavior.
date: 2014-04
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/16772/1/kauffeldt_wiesenfarth_2014_dp562.pdf
identifier: DOI:10.11588/heidok.00016772
identifier: urn:nbn:de:bsz:16-heidok-167726
identifier:   Kauffeldt, Florian ; Wiesenfarth, Boris  (2014) Confidence, Pessimism and their Impact on Product Differentiation in a Hotelling Model with Demand Location Uncertainty.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/16772/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng