Ziegler, GabrielZuazo-Garin, PeioUniversitat Pompeu Fabra. Departament d'Economia i Empresa2020-05-252020-05-252019-01-15http://hdl.handle.net/10230/44765Economic predictions often hinge on two intuitive premises: agents rule out the possibility of others choosing unreasonable strategies ( strategic reasoning ), and prefer strategies that hedge against unexpected behavior ( cautiousness ). These two premises conflict and this undermines the compatibility of usual economic predictions with reasoning-based foundations. This paper proposes a new take on this classical tension by interpreting cautiousness as robustness to ambiguity. We formalize this via a model of incomplete preferences, where (i) each player s strategic uncertainty is represented by a possibly non-singleton set of beliefs and (ii) a rational player chooses a strategy that is a best-reply to every belief in this set. We show that the interplay between these two features precludes the conflict between strategic reasoning and cautiousness and therefore solves the inclusion-exclusion problem raised by Samuelson (1992). Notably, our approach provides a simple foundation for the iterated elimination of weakly dominated strategiesapplication/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative CommonsStrategic cautiousness as an expression of robustness to ambiguity<resourceType xmlns="http://datacite.org/schema/kernel-3" resourceTypeGeneral="Other">info:eu-repo/semantics/workingPaper</resourceType><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">game theory</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">decision theory</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">ambiguity</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">knightian uncertainty</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">incomplete preferences</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">bayesian rationality</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">cautiousness</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">iterated admissibility</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">Microeconomics</subject><rights xmlns="http://datacite.org/schema/kernel-3">info:eu-repo/semantics/openAccess</rights>