Choice deferral and ambiguity aversion

Artikel

When confronted with uncertain prospects, people often exhibit both choice deferral and Ellsberg-type ambiguity aversion. This paper obtains a joint representation for these behavioral phenomena. The decision maker as portrayed by my model is willing to choose an uncertain prospect f over g rather than to defer this choice if and only if the expected utility of f is greater that or equal to the expected utility of g for every probability measure in a convex and closed set Delta. This set is interpreted as a collection of the decision maker's possible future beliefs. When choices cannot be deferred, the decision maker evaluates every uncertain prospect via an epsilon-mixture of the least favorable element in the set Delta and her current probabilistic belief p in Delta. All components of my model are derived from observable preferences in an essentially unique way.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 4 ; Year: 2009 ; Issue: 2 ; Pages: 199-225 ; New York, NY: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Choice deferral ; ambiguity aversion ; epsilon contamination ; multiple priors model ; subjective probability ; Ellsberg Paradox

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kopylov, Igor
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New York, NY
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/150128
• Last update: 10.03.2025, 11:45 AM CET