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Minimax regret and strategic uncertainty

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journal contribution
posted on 16.09.2009, 12:46 by Ludovic Renou, Karl H. Schlag
This paper introduces a new solution concept, a minimax regret equilibrium, which allows for the possibility that players are uncertain about the rationality and conjectures of their opponents. We provide several applications of our concept. In particular, we consider pricesetting environments and show that optimal pricing policy follows a non-degenerate distribution. The induced price dispersion is consistent with experimental and empirical observations (Baye and Morgan (2004)).

History

Citation

Journal of Economic Theory, 2010, 145 (1), pp. 264-286.

Published in

Journal of Economic Theory

Publisher

Elsevier

issn

0022-0531

Available date

16/09/2009

Publisher version

http://www.sciencedirect.com/science/article/pii/S0022053109001070

Notes

This is the author's final draft of the paper published as Journal of Economic Theory, 2010, 145 (1), pp. 264-286. The final version is available from http://www.sciencedirect.com/science/journal/00220531. Doi: 10.1016/j.jet.2009.07.005

Language

en

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