Feedback design in games with ambiguity-averse players

Koessler, Frederic and Pahlke, Marieke ORCID: https://orcid.org/0000-0002-2575-9211 (2025) Feedback design in games with ambiguity-averse players. Journal of Economic Theory, 225 . DOI 10.1016/j.jet.2025.105987

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Official URL: https://doi.org/10.1016/j.jet.2025.105987

Abstract

We use a notion of maxmin self-confirming equilibrium (MSCE) to study the design of players’ information feedback about others’ behavior in simultaneous-move games with ambiguityaverse players. Coarse feedback shapes strategic uncertainty and can, therefore, modify players’ equilibrium strategies in an advantageous way. We characterize MSCE and study the equilibrium implications of coarse feedback in various classes of games. We show how feedback should be optimally designed to improve contributions in generalized volunteer dilemmas and public good games with strategic substitutes, strategic complements, or more general production functions. We also study games with negative externalities and strategic substitutes, such as Cournot oligopolies. In general, perfect and no feedback are suboptimal. Some results are extended to

Item Type:

Article

Uncontrolled Keywords:

Self-confirming equilibrium ; Ambiguity aversion ; Information feedback ; Strategic uncertainty ; Public good games ; Volunteer dilemma

JEL classification:

C72 - Noncooperative Games
D82 - Information, Knowledge, and Uncertainty: Asymmetric and Private Information - Mechanism Design

Divisions:

Institute of Operations and Decision Sciences

Subjects:

Decision making

Projects:

ANR-18-ORAR-0005, ANR-19-CE26-0010-01, Ri 1128-9-1