Contests with Ambiguity
43 Pages Posted: 25 Jun 2014
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: Suggested Citation
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