Risk attitudes and the stag-hunt game

Date

2014-09-01

Author

Büyükboyacı Hanay, Mürüvvet İlknur

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A stag-hunt game (with the risky and safe actions) has two pure Nash equilibria that are Pareto-rankable. The risky action leads either to the Pareto-superior equilibrium (high payoff) or to out of equilibrium (low payoff) depending on the opponent's action. Both players may want to obtain high payoff but uncertainty about the opponent's action may prevent them to take such strategic risk, This paper investigates how information about the risk attitude of an opponent affects a player's action choice in the stag-hunt game. I find that although a subject's propensity to choose the risky action depends on her opponent's risk attitude, it does not depend on her own risk attitude.

Subject Keywords

Risk aversion, Stag-hunt games, Strategic uncertainty, Coordination

URI

https://hdl.handle.net/11511/48077

Journal

ECONOMICS LETTERS

DOI

https://doi.org/10.1016/j.econlet.2014.06.019

Collections

Department of Economics, Article

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Citation Formats

M. İ. Büyükboyacı Hanay, “Risk attitudes and the stag-hunt game,” ECONOMICS LETTERS, pp. 323–325, 2014, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/48077.