This paper applies a proposal of M. Machina (1989) for updating nonexpected utility preferences to D. Schmeidler's (1989) nonadditive probability model. The authors discover that the updated preferences may not themselves satisfy Schmeidler's axioms. Despite this, the updates of uncertainty...

This article considers the impact of ambiguity in strategic situations. It extends the existing literature on games with ambiguity‐averse players by allowing for optimistic responses to ambiguity. We use the CEU model of ambiguity with a class of capacities introduced by Jaffrray and Philippe...

If players' beliefs are strictly nonadditive, the Dempster-Shafer updating rule can be used to define beliefs off the equilibrium path. We define an equilibrium concept in sequential two-person games where players update their beliefs with the Dempster-Shafer updating rule. We show that in the...

This paper analyzes problems of choice under uncertainty where a decisionmaker does not use subjective probabilities. The decisionmaker has a set of beliefs about which states are more likely than others, but his beliefs cannot be represented as subjective probabilities. Three main kinds of...

If an individual follows maximin expected utility theory, then a smart outsider cannot, in general, make a bet with him/her that is certain to win in a single time period. However, the author shows that, when there are many time periods, this is possible in his model unless the decisionmaker...

We study a decision maker who follows the Savage axioms. We show that if he or she is able to take unobservable actions that influence the probabilities of outcomes, then it can appear to an outsider as if his or her subjective probabilities are nonadditive. Implications for multiperiod decision...

This article contains an analysis of a simple principal-agent problem illustrating possible problems that may arise when the prinicpal ascribes to the agent subjective probabilities and utilities that are implied by the subjective expected utility model but do not represent the agent's beliefs...

In most previous work on strategic trade policy, the form of government intervention has been prescribed in advance. In this paper, the authors apply a solution concept discussed by P. D. Klemperer and M. A. Meyer (1989) for games in which the strategy space consists of the class of all...