Strategic Complements, Substitutes, and Ambiguity: The Implications for Public Goods

We examine the e¤ect of ambiguity in symmetric games with aggregate external-ities. We …nd that ambiguity will increase/decrease the equilibrium strategy in games withstrategic complements/substitutes and positive externalities. These e¤ects are reversed ingames with negative externalities. We consider some economic applications of these resultsto Cournot oligopoly, bargaining, macroeconomic coordination and voluntary donations to apublic good. In particular we show that ambiguity may reduce free-riding. Comparative staticsanalysis shows that increases in uncertainty will increase donations, to a public good. Keywords: Ambiguity, Strategic Complements, Public Goods, Choquet Integral, Free Rider. JEL Classi…cation: C72, D81, H41