Paper #1087

Título:

Minimax regret and strategic uncertainty

Autores:

Ludovic Renou y Karl Schlag

Fecha:

Abril 2008

Resumen:

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 pricesetting 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)).

Palabras clave:

Minimax regret, rationality, conjectures, price dispersion, auction

Códigos JEL:

C7

Área de investigación:

Microeconomía

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