EQUILIBRIUM IN BELIEFS UNDER UNCERTAINTY

Existing equilibrium concepts for games make use of the subjective exp ected utility model axiomatized by Savage [28] to represent players' p references. Accordingly, each player's beliefs about the strategies pl ayed by opponents are represented by a probability measure. Motivated by experimental findings such as the Ellsbeg Paradox demonstrating tha t the beliefs of a decision maker may not be representable by a probab ility measure, this paper generalizes equilibrium concepts for normal form games to allow for the beliefs of each player to be representable by a closed and convex set of probability measures. The implications of this generalization for strategy choices and welfare of players are studied. (C) 1996 Academic Press, Inc.