Dragon Slaying with Ambiguity: Theory and Experiments

Abstract This paper studies the impact of ambiguity in the best‐shot and weakest‐link models of public good provision. The models are first analyzed theoretically. Then, we conduct experiments to study how ambiguity affects behavior in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity‐safe strategy is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behavior in games. Subjects tend to choose contributions above (respectively, below) the Nash equilibrium in the best‐shot (respectively, weakest‐link) model.

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