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Strategic Uncertainty: An Experimental Investigation

Strategic Uncertainty: An Experimental Investigation

Objective

Understanding how individuals or groups interact is at the core of virtually every economic and social problem. A central difficulty in studying such interactions is the fact that in practice, players face strategic uncertainty. This uncertainty – uncertainty about how others play the game – is important for determining one’s own behaviour.

This proposal is a broad attempt to bring strategic uncertainty to bear on game theory. The basic premise of this proposal is that, in a wide variety of situations, actors reason under direct forms of strategic uncertainty – forms of strategic uncertainty that are not properly captured by standard equilibrium analysis. While there is a strong theoretical tradition geared towards the investigation of strategic uncertainty (Epistemic Game Theory), there have been few attempts to empirically investigate the role of strategic uncertainty on behaviour. This research will deliver the first comprehensive empirical study of direct strategic uncertainty.

This research program will use the tools of Experimental Economics to investigate the sources of direct strategic uncertainty, how players reason under strategic uncertainty, and the implications for game theoretic models. My proposal will provide evidence and theory on five research themes: i) Is uncertainty about the bounded reasoning of others a source of direct strategic uncertainty? ii) Are there are other sources of strategic uncertainty in bounded reasoning models? What happens if you believe others are more sophisticated than you? iii) How do people reason when facing strategic uncertainty? Does stochastic choice play a role in uncertain situations? iv) How do we incorporate strategic uncertainty into game theoretic models? Can we develop models that are predictive as well as explanatory? And, v) What is the role of strategic uncertainty in dynamic games? In particular, does direct strategic uncertainty cause delays in bargaining?
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Host institution

UNIVERSITY COLLEGE LONDON

Address

Gower Street
Wc1e 6bt London

United Kingdom

Activity type

Higher or Secondary Education Establishments

EU Contribution

€ 1 357 946

Beneficiaries (1)

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UNIVERSITY COLLEGE LONDON

United Kingdom

EU Contribution

€ 1 357 946

Project information

Grant agreement ID: 801635

Status

Ongoing project

  • Start date

    1 November 2018

  • End date

    31 October 2023

Funded under:

H2020-EU.1.1.

  • Overall budget:

    € 1 357 946

  • EU contribution

    € 1 357 946

Hosted by:

UNIVERSITY COLLEGE LONDON

United Kingdom