Variational Preferences and Equilibria in Games under Ambiguous Beliefs Correspondences

In previous papers we studied a game model in which players' uncertainty is expressed entirely in the space of probabilities (lotteries) over consequences, it depends on the entire strategy profile chosen by the agents and it is described by the so called ambiguous beliefs correspondences. In this paper, we extend the previous results by embodying variational preferences in the model. We give a general existence result that we apply to a particular example in which beliefs correspondences depend on the equilibria of specific subgames. Then, we study the limit behavior of equilibria under perturbations on the index of ambiguity aversion.