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Risk attitudes and the stag-hunt game
Date
2014-09-01
Author
Büyükboyacı Hanay, Mürüvvet İlknur
Metadata
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Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License
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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