Contests with Ambiguity

43 Pages Posted: 25 Jun 2014

See all articles by David Kelsey

David Kelsey

Nottingham University Business School

Tigran Melkonyan

University of Warwick

Date Written: June 23, 2014

Abstract

The paper examines the effect of ambiguity on contests where multiple parties expend resources to win a prize. We develop a model where contenders perceive ambiguity about their opponents' strategies and determine how perceptions of ambiguity and attitudes to ambiguity affect equilibrium choice. The paper also investigates how equilibrium under ambiguity is related to behavior where contenders have expected utility preferences. Our model can explain experimental results such as overbidding and overspreading relative to Nash predictions.

Keywords: Ambiguity, contests, games

Suggested Citation

Kelsey, David and Melkonyan, Tigran, Contests with Ambiguity (June 23, 2014). Available at SSRN: https://ssrn.com/abstract=2458196 or http://dx.doi.org/10.2139/ssrn.2458196

David Kelsey (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://https://www.nottingham.ac.uk/business/people/lizdk2.html

Tigran Melkonyan

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

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