Strategic Complements, Substitutes, and Ambiguity: The Implications for Public Goods |
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Authors: | Jü rgen EichbergerDavid Kelsey |
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Affiliation: | a Alfred Weber Institut, Universität Heidelberg, D-69117, Germanyf1juergen-eichberger@awi.uni-heidelberg.def1b Department of Economics, University of Birmingham, Birmingham, B15 2TT, Englandf2d.kelsey@bham.ac.ukf2 |
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Abstract: | We examine the effect of ambiguity in symmetric games with aggregate externalities. We find that ambiguity will increase/decrease the equilibrium strategy in games with strategic complements/substitutes and positive externalities. These effects are reversed in games with negative externalities. We consider some economic applications of these results to Cournot oligopoly, bargaining, macroeconomic coordination, and voluntary donations to a public good. In particular we show that ambiguity may reduce free-riding. Comparative statics analysis shows that increases in uncertainty will increase donations, to a public good. Journal of Economic Literature C72, D81, H41. |
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Keywords: | ambiguity strategic complements public goods Choquet integral free rider. |
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