Uncertainty and Strategic Interaction in Economics
by
Jürgen Eichberger
University of Saarland
Coauthors: David Kelsey (University of Birmingham)

Uncertainty about the behaviour of other economic players is difficult to model since strategies are usually endogenously determined in equilibrium. Recent developments in decision and game theory offer an opportunity to include strategic uncertainty as an explanatory variable in economic analysis.

This paper introduces to a new concept of decision making under uncertainty and an adapted notion of strategic equilibrium. With these tools, several economic models of strategic interaction, ranging from industrial organisation to macroeconomics, are re-examined. These applications provide an opportunity to assess the contribution of uncertainty for a better understanding of strategic interaction in economics.

Date received: April 26, 2000

Copyright © 2000 by the author(s). The author(s) of this document and the organizers of the conference have granted their consent to include this abstract in Atlas Conferences Inc. Document # caez-59.