Feedback design in games with ambiguity-averse players

Abstract

We use a notion of maxmin self-confirming equilibrium (MSCE) to study the design of players' information feedback about others' behavior in simultaneous-move games with ambiguity-averse players. Coarse feedback shapes strategic uncertainty and can, therefore, modify players' equilibrium strategies in an advantageous way. We characterize MSCE and study the equilibrium implications of coarse feedback in various classes of games. We show how feedback should be optimally designed to improve contributions in generalized volunteer dilemmas and public good games with strategic substitutes, strategic complements, or more general production functions. We also study games with negative externalities and strategic substitutes, such as Cournot oligopolies. In general, perfect and no feedback are suboptimal. Some results are extended to α-maxmin preferences.