Dragon Slaying with Ambiguity: Theory and Experiments
Paper number: 15/06
Paper date: 15th April 2015
Paper Category: Discussion Paper
Sara le Roux and David Kelsey
This paper studies the impact of ambiguity in the best shot and weakest link models of public good provision. The models are first analysed theoretically. Then we conduct experiments to study how ambiguity affects behaviour in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity safe strategy, is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behaviour in games. Subjects tend to choose contributions above (resp. below) the Nash equilibrium in the Best Shot (resp. Weakest Link) model.
Keywords: Public goods; Ambiguity; Choquet expected utility; strategic complements; weakest link; best shot.
JEL Classification: C72; C91; D03; D81; H41