Nash equilibria with Knightian uncertainty; the case of capacities (Q943344)

A capacity is a function on a \(\sigma\)-algebra of sets which, like a probability function, assigns 0 to the empty set, 1 to the whole space, and respects inclusion. Unlike a probability, it is not assumed to be additive. \textit{R. Kozhan} and \textit{M. Zarichnyi} [Econ. Theory 35, No. 2, 321--331 (2008; Zbl 1152.91386)], introduced an approach to game theory concepts when Knightian uncertainty is modelled using capacities, and defined tensor products to combine the capacities on the strategy sets of the players to obtain a capacity on the product of those strategy sets. They then defined Nash equilibria in a way analogous to that for (additive) probabilities. The present authors show how the tensor product for a 2 by 2 game can be calculated, and then in a specific example calculate the expected utility function and the Nash equilibria in capacities.