Strategic cautiousness as an expression of robustness to ambiguity

• 成果类型: Article
• 署名作者: Ziegler, Gabriel; Zuazo-Garin, Peio
• 署名单位: Northwestern University; University of Basque Country
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2019.10.001
• 发表日期: 2020
• 页码: 197-215
• 关键词: Game theory; decision theory; ambiguity; Knightian uncertainty; incomplete preferences; Bayesian rationality; cautiousness; Iterated admissibility

摘要

Economic predictions often hinge on two intuitive premises: agents rule out the possibility of others choosing unreasonable strategies ('strategic reasoning'), and prefer strategies that hedge against unexpected behavior ('cautiousness'). These two premises conflict and this undermines the compatibility of usual economic predictions with reasoning-based foundations. This paper proposes a new take on this classical tension by interpreting cautiousness as robustness to ambiguity. We formalize this via a model of incomplete preferences, where (i) each player's strategic uncertainty is represented by a possibly non-singleton set of beliefs and (ii) a rational player chooses a strategy that is a best-reply to every belief in this set. We show that the interplay between these two features precludes the conflict between strategic reasoning and cautiousness and therefore solves the inclusion-exclusion problem raised by Samuelson (1992). Notably, our approach provides a simple foundation for the iterated elimination of weakly dominated strategies. (C) 2019 Elsevier Inc. All rights reserved.