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Measuring strategic-uncertainty attitudes

Published online by Cambridge University Press:  14 March 2025

Lisa Bruttel ,
Muhammed Bulutay ,
Camille Cornand ,
Frank Heinemann  and
Adam Zylbersztejn
Lisa Bruttel*
Affiliation:
Department of Economics and Social Sciences, Chair for Markets, Competition, and Institutions, Universität Potsdam, August-Bebel-Str. 89, 14482 Potsdam, Germany
Muhammed Bulutay*
Affiliation:
Technische Universität Berlin, Chair of Macroeconomics, H 52 - Straße des 17. Juni 135, 10623 Berlin, Germany
Camille Cornand*
Affiliation:
Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France
Frank Heinemann*
Affiliation:
Technische Universität Berlin, Chair of Macroeconomics, H 52 - Straße des 17. Juni 135, 10623 Berlin, Germany
Adam Zylbersztejn*
Affiliation:
Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France Vistula University Warsaw (AFiBV), Warsaw, Poland
*
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
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Abstract

Strategic uncertainty is the uncertainty that players face with respect to the purposeful behavior of other players in an interactive decision situation. Our paper develops a new method for measuring strategic-uncertainty attitudes and distinguishing them from risk and ambiguity attitudes. We vary the source of uncertainty (whether strategic or not) across conditions in a ceteris paribus manner. We elicit certainty equivalents of participating in two strategic 2 × 2 games (a stag-hunt and a market-entry game) as well as certainty equivalents of related lotteries that yield the same possible payoffs with exogenously given probabilities (risk) and lotteries with unknown probabilities (ambiguity). We provide a structural model of uncertainty attitudes that allows us to measure a preference for or an aversion against the source of uncertainty, as well as optimism or pessimism regarding the desired outcome. We document systematic attitudes towards strategic uncertainty that vary across contexts. Under strategic complementarity [substitutability], the majority of participants tend to be pessimistic [optimistic] regarding the desired outcome. However, preferences for the source of uncertainty are distributed around zero.

Keywords

Risk attitudesAmbiguity attitudesStrategic-uncertainty attitudesStag-hunt gameMarket-entry game

JEL classification

C91: Laboratory, Individual Behavior D81: Criteria for Decision-Making under Risk and Uncertainty C92: Laboratory, Group Behavior C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 3 , July 2023 , pp. 522 - 549
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2022.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-022-09779-2.

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