Strategic Uncertainty Research Articles

Cognitive ability in matching with strategic uncertainty: An experimental study

Strategyproof mechanisms have become the predominant choice for educational institutions. However, both laboratory experiments and empirical evidence highlight the persistent occurrence of strategic misreporting, leading to adverse consequences. This underscores the need to examine the reporting strategies of students, particularly those with varying cognitive abilities, across different decision environments. We present an experimental comprehension test of reporting strategies using computerized opponents to precisely control the levels of strategic uncertainty. The results reveal that removing strategic uncertainty does not significantly affect truth-telling rates. However, subjects with median cognitive ability are more truthful under strategic uncertainty, especially when information is incomplete. Additionally, providing information about priorities has a negative and significant impact on truth-telling rates. The findings of this research demonstrate that constructing a simplified market environment using computerized agents and providing relevant feedback to students can effectively enhance their understanding of the matching mechanism and nudge them to make optimal strategy choices.

An experimental test on the hypothesis of strategic uncertainty

AbstractThis study tests the influential hypothesis of strategic uncertainty (HSU) on the topic of bubble formation. We argue that if HSU holds, it shall apply to a stricter situation in which subjects in the market are rational, but none of them know the rationality distribution of others. The research strategies of exclusion and analogy are adopted to create a market that satisfies the two prerequisites of HSU. Briefly, a cohort of 24 participants in the same group is separated equally into three small groups using a pre‐determined rule within a 20‐period treatment. Group #1 is our primary concern, and its members comprise participants whose units of assets are zero with an auxiliary criterion by subjects' performance at the end of Period 5. Across sessions, we determine whether the regrouping criteria and group tags are displayed to subjects to control how hard it is for a trader to judge the distribution of others in his/her group. We observe that mispricing generally vanishes in both the experimental and control groups. This result delivers a negative judgement of HSU at the aggregate level. Observations at the individual level and the robustness experiments deliver the same judgement.

Does communication increase the precision of beliefs?

This paper explores one channel in which communication facilitates cooperation – belief precision. A prisoner’s dilemma experiment shows that communication not only promotes optimism about the partner’s cooperation but also increases the precision of this belief, thereby reducing strategic uncertainty.

Gender identity, salience of information, and tacit coordination: Gender differences in response to strategic uncertainty

We use a lab experiment to explore whether gender composition and gender identity salience influence team coordination. Identity in the experiment is induced using gender-specific and neutral avatars. In contrast with many previous studies, we do not find the presence of in-group favoritism, irrespective of whether gender identity or random avatars define the group. In addition, behavior remains unchanged when the gender of the counterpart is revealed. However, females are found to cooperate significantly more when gender information is disclosed, implying an elevation in the salience of gender identity induces the females to choose based on social expectations. This research adds to the discourse on gender dynamics in decision-making and suggests that gender identity plays a role in economic choices, innovating traditional views on diversity in teamwork. Our research sheds light on the intricate dynamics of gender composition in team settings, particularly under conditions of risk and uncertainty. These findings have the potential to inform both organizational practices and public policy, thereby contributing to a more equitable and efficient labor market.

Testing Models of Strategic Uncertainty: Equilibrium Selection in Repeated Games

Abstract In repeated games, where both collusive and non-collusive outcomes can be supported as equilibria, it is crucial to understand the likelihood of selection for each type of equilibrium. Controlled experiments have empirically validated a selection criterion for the two-player repeated prisoner’s dilemma: the basin of attraction for always defect. This prediction device uses the game primitives to measure the set of beliefs for which an agent would prefer to unconditionally defect rather than attempt conditional cooperation. This belief measure reflects strategic uncertainty over others’ actions, where the prediction is for non-cooperative outcomes when the basin measure is full, and cooperative outcomes when empty. We expand this selection notion to multi-player social dilemmas and experimentally test the predictions, manipulating both the total number of players and the payoff tensions. Our results affirm the model as a tool for predicting long-term cooperation while also speaking to some limitations when dealing with first-time encounters.

The Unification of Evolutionary Dynamics through the Bayesian Decay Factor in a Game on a Graph.

We unify evolutionary dynamics on graphs in strategic uncertainty through a decaying Bayesian update. Our analysis focuses on the Price theorem of selection, which governs replicator(-mutator) dynamics, based on a stratified interaction mechanism and a composite strategy update rule. Our findings suggest that the replication of a certain mutation in a strategy, leading to a shift from competition to cooperation in a well-mixed population, is equivalent to the replication of a strategy in a Bayesian-structured population without any mutation. Likewise, the replication of a strategy in a Bayesian-structured population with a certain mutation, resulting in a move from competition to cooperation, is equivalent to the replication of a strategy in a well-mixed population without any mutation. This equivalence holds when the transition rate from competition to cooperation is equal to the relative strength of selection acting on either competition or cooperation in relation to the selection differential between cooperators and competitors. Our research allows us to identify situations where cooperation is more likely, irrespective of the specific payoff levels. This approach provides new perspectives into the intended purpose of Price's equation, which was initially not designed for this type of analysis.

The Role of Interactive Control System In Responding to Strategic Uncertainties of SEOJK PAYDI

SEOJK5/2022 as a novel PAYDI regulation had triggered strategic uncertainty for ABC, where 40% of income was supported by sales of PAYDI. SEOJK5/2022 has several points which change majority of product structures including PAYDI operations. This research discusses how ABC implements interactive control systems (ICS) to face strategic uncertainties, considering there were only few companies had succeeded to respond SEOJK5/2022 well. Qualitative case study method was used in this research, main data collected through interviews and questionnaires. The result concludes that ABC had emphasized the use of ICS in the emergent strategies formulation process, debate and dialogue were carried out intensively at various levels. ABC had succeeded in responding SEOJK5/2022 by making adjustments to all available PAYDI in the company before time limit. During the adjustment period, ABC increased their sales by emphasizing traditional insurance sales. This research contributes additional evidence to levers of control study in facing strategic uncertainties.

북·중·러 연합의 형성과 전망

This study analyzes the North Korea, China, and Russia coalition amidst complex global crises like the US-China strategic competition, the US-Russia crisis, and the North Korean nuclear issue, using coordination games and problems as analytical tools. In the ‘New Cold War’ context, they identify a focal point, form coalitions, and coordinate strategies based on reactive anti-US policies and confrontations with coalitions involving ROK, the US, and Japan. However, differing perspectives on the ‘New Cold War’ and external factors leading to divergent focal points resulted in strategic uncertainty. Forming a stable grand coalition as an institution is challenging, and there is a risk of abandonment when forming a specific coalition based on interests. Moreover, the emergence of spoilers within the coalition breeds apprehension among other nations, rendering the coalition unsustainable. Consequently, the sustainability of the North Korea-China-Russia coalition diminishes, fostering ongoing non-cooperative behavior amidst a temporary phase of adhesion.

Analisis Kritis Anggaran Pertahanan

Defense budget is an essential component in a country's defense strategy. The selection of effective methods in managing and evaluating defense budgets can have a significant impact on national defense capabilities. Therefore, this study aims to critically analyze the methods of managing and evaluating defense budgets through relevant literature studies. The method used in this research is literature review, involving the collection and analysis of journals, books, government reports, and other relevant publications. This research involves an in-depth examination of the methods of managing and evaluating defense budgets that have been implemented by countries across the globe. The analysis results indicate that there is significant variation in the approaches to managing and evaluating defense budgets in different countries. Commonly used methods include top-down and bottom-up approaches, cost-benefit analysis, risk analysis, and strategic planning techniques. Furthermore, this research also identifies the challenges faced by countries in managing and evaluating defense budgets, such as political complexity, strategic uncertainty, and resource limitations. This study provides valuable insights into the methods that can be applied in managing and evaluating defense budgets. In the context of national defense planning, a profound understanding of these various methods can assist countries in optimizing their resource allocation, enhancing the efficiency and effectiveness of defense budget management, and strengthening national defense capabilities.
 Keywords: Defense Budget, Budget Management, Budget Evaluation, Defense Strategy, National Defense Planning.

Predicting Cooperation with Learning Models

We use simulations of a simple learning model to predict cooperation rates in the experimental play of the indefinitely repeated prisoner’s dilemma. We suppose that learning and the game parameters only influence play in the initial round of each supergame, and that after these rounds, play depends only on the outcome of the previous round. We find that our model predicts out-of-sample cooperation at least as well as models with more parameters and harder-to-interpret machine learning algorithms. Our results let us predict the effect of session length and help explain past findings on the role of strategic uncertainty. (JEL C57, C72, C73, D83, D91)

Forum shifting in global health security.

Global health security is an increasingly complex regime. The failures of global governance and norms of cooperation during the coronavirus disease 2019 (COVID-19) pandemic and the re-entrenchment to nationalist policy-making have created impetus for new governance arrangements, institutions and policy development. These changes include amendments to the International health regulations (IHR), development of a pandemic convention or accord, convening of the High-Level Meeting on Pandemic Preparedness and Response, establishment of the Pandemic fund, and development of the medical countermeasures platform, among others. These various developments claim to be in synergy with each other, but understanding of regime complexes and forum shifting from international relations reveal the power dynamics which underlie these processes. I use these concepts to demonstrate how states are transferring negotiations from one institutional location to another in search of more favourable outcomes, or are creating strategic uncertainty within negotiations to avoid future accountability. I further highlight three risks posed by these developments: (i)an increasingly complex landscape for global health security; (ii)erosion of the World Health Organization's authority in global health security; and (iii)dominance of high-income state positions within these negotiations.

Analisis Kritis Anggaran Pertahanan: Studi Literatur Tentang Metode Pengelolaan dan Evaluasi

Defense budget is an essential component in a country's defense strategy. The selection of effective methods in managing and evaluating defense budgets can have a significant impact on national defense capabilities. Therefore, this study aims to critically analyze the methods of managing and evaluating defense budgets through relevant literature studies. The method used in this research is literature review, involving the collection and analysis of journals, books, government reports, and other relevant publications. This research involves an in-depth examination of the methods of managing and evaluating defense budgets that have been implemented by countries across the globe. The analysis results indicate that there is significant variation in the approaches to managing and evaluating defense budgets in different countries. Commonly used methods include top-down and bottom-up approaches, cost-benefit analysis, risk analysis, and strategic planning techniques. Furthermore, this research also identifies the challenges faced by countries in managing and evaluating defense budgets, such as political complexity, strategic uncertainty, and resource limitations. This study provides valuable insights into the methods that can be applied in managing and evaluating defense budgets. In the context of national defense planning, a profound understanding of these various methods can assist countries in optimizing their resource allocation, enhancing the efficiency and effectiveness of defense budget management, and strengthening national defense capabilities.
 Keywords: Defense Budget, Budget Management, Budget Evaluation, Defense Strategy, National Defense Planning.

НЕВИЗНАЧЕНІСТЬ В КОНТЕКСТІ ФОРМУВАННЯ ФІНАНСОВОЇ СТРАТЕГІЇ

The financial development of business entities and the strengthening of the influence of external factors on it actualize the renewal and further development of the uncertainty theory. Therefore, the purpose of the study is to develop conceptual approaches to the generation of uncertainty management methodology to build a theoretical basis for the development of a financial strategy taking into account the uncertainty factor. Groups of factors influencing uncertainty on the formation and implementation of the financial strategy of business entities were analyzed. The essence and content of strategic uncertainty are determined from the point of view of economic theory, adaptive approach, informational approach. The classification features of uncertainty are summarized: time horizon, focus, level of impact, predictability, information requirements, difficulty of forecasting,scope, the degree of impact on business,ability to manage. On the basis of the conducted content analysis, the characteristics of uncertainty and strategic uncertainty are distinguished. A comparative description of tactical and strategic uncertainty in the plane of financial and economic activity is given. It is noted that the theory of uncertainty has a complementary nature and contains theories, concepts of management, financial management, economic theory, risk management, strategic management, praxeology, and applied mathematics. The system of basic concepts on which the uncertainty theory is based is summarized: theory of "black swan", theory of games and economic behavior, theory of chaos, theory of risk management, theory of risk management, theory of complex adaptive systems, theory of asymmetric information, theory of stochastic control, theory of options, dynamic capabilities, the open system theory. The components of the methodology of strategic uncertainty management are systematized and substantiated. The methodical provision of strategic uncertainty management is substantiated. The main components of strategic uncertainty management are determined, which allows building the gradient of financial development of the business entity.

Experimentalist Competition Law Enforcement as a Complementary Data Sharing Toolkit: Learning from AGCM v. Google – Ostacoli alla Portabilità dei Dati

Analysing the Italian case AGCM v. Google – Ostacoli alla portabilità dei dati, this paper scrutinises the “experimentalist architecture” of public competition law enforcement in dealing with data sharing disputes. In AGCM v. Google, the experimentalist competition law enforcement aimed at ensuring and designing the right to data portability provided by Article 20 GDPR. The paper investigates the extent to which the conditions and distinctive features of the experimentalist architecture play a role in AGCM v. Google, which include: strategic uncertainty, polyarchic distribution of powers, high degree of discretion of local agents, dynamic accountability, and the participation of all stakeholders in the design, review and updating of cross-sectoral data sharing solutions. In conducting the analysis, the internal administrative dialogue between local actors within the national competition law enforcement process is examined. In addition, the paper explores the potential for an external administrative dialogue between national competition law enforcement, implementation mechanisms, and regulatory revisions of the data sharing framework, involving local and EU actors.

Presenting the Interactive Control System Model in Knowledge-Based Companies

The aim of this study is to present a model of the interactive control system in knowledge-based companies. In the current research, three Type II knowledge-based manufacturing companies active in the field of advanced machinery and equipment production in East Azerbaijan Province were studied. Accordingly, this research follows a case study strategy, with data collection conducted from a defined statistical population. Additionally, the research employs a developmental research strategy. For the analysis of data obtained from questionnaires, the coding procedure, in line with statistical requirements, was conducted using the SPSS.V24 software, and the PLS.V3 structural equation software was used for both descriptive and inferential statistics, applying linear and multiple regression. The statistical population of this research includes managers of Type I and Type II knowledge-based manufacturing companies and faculty members from the University of Tehran's Department of Business Management, particularly those specializing in policy-making. The sampling method used in this study was snowball sampling. The results of the research indicate that regulatory uncertainties significantly impact the interactive control system of projects (0.896), technological uncertainties impact the interactive control system of projects (0.140), human and social uncertainties impact the interactive control system of projects (0.225), economic and market uncertainties impact the interactive control system of profit planning (0.476), environmental uncertainties impact the interactive control system of brand profitability (0.643), and strategic uncertainties impact the interactive control system of intelligence (0.821).

Bridging Futures: Academia-Industry Partnership in the Time of Strategic Uncertainty

Bridging Futures: Academia-Industry Partnership in the Time of Strategic Uncertainty

Equilibrium Selection in Hawk–Dove Games

We apply three equilibrium selection techniques to study which equilibrium is selected in a hawk–dove game with a multiplicity of equilibria. By using a uniform-price auction as an illustrative example, we find that when the demand in the auction is low or intermediate, the tracing procedure method of Harsanyi and Selten (1988) and the quantal response method of McKelvey and Palfrey (1998) select the same equilibrium. When the demand is high, the tracing procedure method does not select any equilibrium, but the quantal response method still selects the same equilibrium as when the demand is low or intermediate. The robustness to strategic uncertainty method of Andersson, Argenton and Weibull (2014) selects two of the multiple equilibria irrespective of the demand size. We also analyze the impact of an increase in the minimum bid allowed by the auctioneer in the equilibrium selection.

A Study of Uncertainty & Expectations in Asset Markets

This paper comprehensively examines the impact of expectations and uncertainty on asset market dynamics, with a particular focus on the role of conformity, momentum effects, and strategic uncertainty in shaping market participants' behavior and influencing asset prices and trading volumes. Drawing upon the existing literature, the paper critically reviews the role of these factors in contributing to market inefficiencies, volatility, and potential instability. Acknowledging the limitations of laboratory settings and the challenges in controlling for cognitive factors, such as players' perceptions of their opponents' rationality, the study aims to provide a deeper understanding of the dynamics of mispricing in asset market experiments. Furthermore, the paper discusses the importance of considering psychological factors, such as reversal and momentum effects, when analyzing financial market dynamics and investor decision-making. By proposing a new experiment that addresses the questions raised in the literature, this paper seeks to advance our knowledge of the critical factors influencing investor decision-making in the face of uncertainty, the factors that contribute to mispricing in asset markets, and the importance of public knowledge in shaping market outcomes. The insights gleaned from this research contribute significantly to our understanding of uncertainty and expectations in asset markets and have important implications for market participants, policymakers, and researchers seeking to foster greater stability and efficiency in financial markets.

The real effects of transparency in crowdfunding

AbstractIn this paper, we investigate the real effects of information transparency in crowdfunding markets. Our analysis shows that the crowdfunding market features an under‐implementation inefficiency, driven by two types of uncertainty that consumers face: fundamental uncertainty about the entrepreneur's implementation cost, and strategic uncertainty due to potential coordination failures among consumers. We find that when both fundamental and strategic uncertainties are present, eliminating the fundamental uncertainty alone by revealing the implementation cost does not necessarily improve efficiency. Surprisingly, from an ex ante perspective, greater transparency makes the coordination among crowdfunding consumers less efficient, which makes the under‐implementation problem even worse and thus impairs efficiency. Our findings send a message of caution against promoting greater transparency in the crowdfunding market.

Reducing strategic uncertainty in transportation networks by personalized routing advice: A route-choice laboratory experiment

One fundamental reason causing traffic flow instability and the difficulties in predicting traffic conditions is strategic uncertainty. This paper experimentally investigated how routing advice influenced strategic uncertainty and analyzed compliance behavior and decision time that might affect strategic uncertainty. Subjects participated in a route-choice game in which they were required to choose among three routes from one origin to one destination. Two routing advice strategies, user-optimal recommendation (UOR) and system-optimal recommendation (SOR), taking into account subjects’ choice inertia, were investigated. The experimental results indicated that (i) UOR could reduce strategic uncertainty and stabilize traffic flow, whereas SOR was counterproductive, (ii) subjects were more likely to comply with UOR compared with SOR and preferred to follow the advice with the same choices as the previous round rather than the route switching advice, (iii) the subjects with faster decisions (intuition) had higher compliance rates and lower travel costs than those with slower decisions (deliberation). Our experimental findings suggest that fairness and psychological factors are crucial in route choice, providing valuable guidance in designing personalized advanced traveler information systems.