@article{06a572a1e175440abe469dfd232b50ab,
title = "Optimism and pessimism in strategic interactions under ignorance",
abstract = "We study players interacting under the veil of ignorance, who have—coarse—beliefs represented as subsets of opponents{\textquoteright} actions. We analyze when these players follow max min or max max decision criteria, which we identify with pessimistic or optimistic attitudes, respectively. Explicitly formalizing these attitudes and how players reason interactively under ignorance, we characterize the behavioral implications related to common belief in these events: while optimism is related to Point Rationalizability, a new algorithm—Wald Rationalizability— captures pessimism. Our characterizations allow us to uncover novel results: (i) regarding optimism, we relate it to wishful thinking {\'a} la Yildiz (2007) and we prove that dropping the (implicit) “belief-implies-truth” assumption reverses an existence failure described therein; (ii) we shed light on the notion of rationality in ordinal games; (iii) we clarify the conceptual underpinnings behind a discontinuity in Rationalizability hinted in the analysis of Weinstein (2016).",
keywords = "ignorance, optimism/pessimism, Point/Wald Rationalizability, interactive epistemology, wishful thinking, B{\"o}rgers dominance",
author = "Pierfrancesco Guarino and Gabriel Ziegler",
note = "Funding Information: The authors would like to thank Emiliano Catonini, Francesco De Sinopoli, Amanda Friedenberg, Michele Gori, Michael Greinecker, Cristoph Kuzmics, Burkhard Schipper, Peio Zuazo-Garin, the anonymous associate editor who handled the paper, various anonymous referees, the audiences of the special session on economic theory of the NOeG 2021 conference, of the GRASSXV workshop, of the CEPET2022 workshop, of the 2nd Durham Economic Theory Conference, of the LOFT2022 Conference, and of the seminars at the Department of Economics at the University of Verona, the Queen's Management School at Queen's University Belfast, and the Department of Business Decisions and Analytics at the University of Vienna. Of course, all errors are our own. Previous versions of this paper circulated under various titles. For the purpose of open access, the authors have applied a {\textquoteleft}Creative Commons Attribution (CC BY) licence{\textquoteright} to any Author Accepted Manuscript version arising from this submission. Pierfrancesco thankfully acknowledges financial support from the Austrian Science Fund (FWF) ( P31248-G27 ) and from MIUR under the PRIN 2017 program (grant number 2017K8ANN4 ). Funding Information: The authors would like to thank Emiliano Catonini, Francesco De Sinopoli, Amanda Friedenberg, Michele Gori, Michael Greinecker, Cristoph Kuzmics, Burkhard Schipper, Peio Zuazo-Garin, the anonymous associate editor who handled the paper, various anonymous referees, the audiences of the special session on economic theory of the NOeG 2021 conference, of the GRASSXV workshop, of the CEPET2022 workshop, of the 2nd Durham Economic Theory Conference, of the LOFT2022 Conference, and of the seminars at the Department of Economics at the University of Verona, the Queen's Management School at Queen's University Belfast, and the Department of Business Decisions and Analytics at the University of Vienna. Of course, all errors are our own. Previous versions of this paper circulated under various titles. For the purpose of open access, the authors have applied a {\textquoteleft}Creative Commons Attribution (CC BY) licence{\textquoteright} to any Author Accepted Manuscript version arising from this submission. Pierfrancesco thankfully acknowledges financial support from the Austrian Science Fund (FWF) (P31248-G27) and from MIUR under the PRIN 2017 program (grant number 2017K8ANN4). Publisher Copyright: {\textcopyright} 2022 The Author(s)",
year = "2022",
month = nov,
doi = "10.1016/j.geb.2022.10.012",
language = "English",
volume = "136",
pages = "559--585",
journal = "Games and Economic Behavior",
issn = "0899-8256",
publisher = "Academic Press",
}