The endogeneity of equilibrium strategies makes modelling uncertainty about the behaviour of other economic players difficult. Recent developments in decision and game theory offer an opportunity to include strategic uncertainty as an explanatory variable in economic analysis. This paper...

This paper introduces E-capacities as a representation of beliefs which incorporates objective information about the probability of events. It can be shown that the Choquet integral of an E-capacity is the Ellsberg representation. The paper further explores properties of this representation of...

This paper proposes a measure of uncertainty-aversion analogous to the Arrow-Pratt Measure of risk aversion. We apply it to multiple priors and non additive probability models of uncertaity. In these models there is non distinction between uncertainty and aversion to it. Hence our theory can...

We study a decision-maker who follows the Savage axioms. We show that if s(he) is able to take unobservable actions which influence the probabilities of outcomes then it can appear to an outsider as if his/her subjective probabilities are non-additive. Implications for multi-period decisions are...

We examine the effect of Knightian uncertainty in a simple model of public good provision. We find that uncertainty may reduce free-riding if utility is concave or there are decreasing returns to scale in the production of public goods. Comparative statics analysis shows that increases in...