Optimism in Games with Non-Probabilistic Uncertainty

Abstract

The paper studies one-shot two-player games with non-Bayesian uncertainty. The players have an attitude that ranges from optimism to pessimism in the face of uncertainty. Given the attitudes, each player forms a belief about the set of possible strategies of the other player. If these beliefs are consistent, one says that they form an uncertainty equilibrium. One then considers a two-phase game where the players first choose their attitude and then play the resulting game. The paper illustrates these notions with a number of games where the approach provides a new insight into the plausible strategies of the players.