Strategic Complements, Substitutes, and Ambiguity: The Implications for Public Goods

Strategic Substitutes, Complements and Ambiguity: An Experimental Study

“…We …nd that ambiguity has the opposite e¤ect in games of strategic substitutes and complements. This con…rms a theoretical prediction made by Eichberger and Kelsey (2002). In addition, we note that subjects' ambiguityattitudes appear to be context dependent: ambiguity-loving in single person decisions and ambiguity-averse in games.…”

“…An EUA will exist for any given ambiguity-attitude of the players, (see Eichberger and Kelsey (2014) for a proof). In equilibrium each player uses a strategy which is a best response given his/her beliefs.…”

“…From this viewpoint each player has a subjective belief about ability distribution on X i . 4 For a justi…cation of this de…nition and its relation to other support notions see Eichberger and Kelsey (2014). the actions of his/her opponents and chooses a best response to this belief.…”

“…The following result is the main theoretical prediction, which our experiments are designed to test. A formal proof can be found in Eichberger and Kelsey (2014). 1.…”

“…Our paper is an experimental test of Eichberger and Kelsey (2002), which predicts that ambiguity has opposite e¤ects in games of strategic complements and substitutes. In the case of strategic substitutes, increasing the level of ambiguity would shift the equilibrium strategies in an ex-post Pareto improving direction, whereas for strategic complements, an increase in ambiguity would have the opposite e¤ect.…”