Risk attitudes and the stag-hunt game |
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Authors: | Mü rü vvet Bü yü kboyacı |
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Affiliation: | California Institute of Technology, Division of the Humanities and Social Sciences, Pasadena, CA 91125, United States; Middle East Technical University, Northern Cyprus Campus, Guzelyurt, TRNC, Mersin 10, Turkey |
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Abstract: | A stag-hunt game (with the risky and safe actions) has two pure Nash equilibria that are Pareto-rankable. The risky action leads either to the Pareto-superior equilibrium (high payoff) or to out of equilibrium (low payoff) depending on the opponent’s action. Both players may want to obtain high payoff but uncertainty about the opponent’s action may prevent them to take such strategic risk. This paper investigates how information about the risk attitude of an opponent affects a player’s action choice in the stag-hunt game. I find that although a subject’s propensity to choose the risky action depends on her opponent’s risk attitude, it does not depend on her own risk attitude. |
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Keywords: | C72 C91 D03 D81 |
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