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Minimax regret and strategic uncertainty

Renou, Ludovic and Schlag, Karl H (2010) 'Minimax regret and strategic uncertainty.' Journal of Economic Theory, 145 (1). pp. 264-286. ISSN 0022-0531

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Abstract

This paper introduces a new solution concept, a minimax regret equilibrium, which allows for the possibility that players are uncertain about the rationality and conjectures of their opponents. We provide several applications of our concept. In particular, we consider price-setting environments and show that optimal pricing policy follows a non-degenerate distribution. The induced price dispersion is consistent with experimental and empirical observations (Baye and Morgan (2004) 4).

Item Type: Article
Uncontrolled Keywords: Minimax regret; Rationality; Conjectures; Price dispersion; Auction
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 07 Jan 2013 16:41
Last Modified: 07 Jan 2013 16:41
URI: http://repository.essex.ac.uk/id/eprint/5026

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