THE AMBIGUITY AVERSION LITERATURE: A CRITICAL ASSESSMENT
نویسندگان
چکیده
منابع مشابه
The Ambiguity Aversion Literature: A Critical Assessment∗
We provide a critical assessment of the ambiguity aversion literature, which we characterize in terms of the view that Ellsberg choices are rational responses to ambiguity, to be explained by relaxing Savage’s sure thing principle and adding an ambiguity-aversion postulate. First, admitting Ellsberg choices as rational leads to behavior, such as sensitivity to irrelevant sunk cost, or aversion ...
متن کاملTwo out of three ain’t bad:∗ a comment on “The ambiguity aversion literature: A critical assessment”
Al-Najjar and Weinstein 2009 propose to scrutinize the implications of recent theories of ambiguity in dynamic settings. They conclude that such implications are so unreasonable as to cast doubts on the legitimacy of the theories under consideration. The present paper argues that the seemingly unreasonable implications highlighted by Al-Najjar and Weinstein can be understood as the result of ba...
متن کاملAmbiguity and Ambiguity Aversion
Consider the following choice problem, known as “Ellsberg’s three-color urn example”, or simply the “Ellsberg Paradox” (Ellsberg [7]). An urn contains 30 red balls, and 60 green and blue balls, in unspecified proportions; subjects are asked to compare (i) a bet on a red draw vs. a bet on a green draw, and (ii) a bet on a red or blue draw vs. a bet on a green or blue draw. If the subject wins a ...
متن کاملDecreasing aversion under ambiguity
Under which condition does the set of desirable uncertain prospects expand when wealth increases? We show that the decreasing concavity (DC) of the utility function is necessary and sufficient in the −maxmin expected utility model. In the smooth ambiguity aversion model with the ambiguity valuation function , the DC of and of ◦ is necessary and sufficient. An alternative definition of d...
متن کاملAmbiguity Aversion as a Reason to Choose Tournaments Ambiguity Aversion as a Reason to Choose Tournaments *
We test the implications of ambiguity aversion in a principal-agent problem with multiple agents. When output distributions are uncertain, models of ambiguity aversion suggest that tournaments may become more attractive than independent wage contracts, in contrast to the case where output distributions are known. We do so by presenting agents with a choice between tournaments and independent co...
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ژورنال
عنوان ژورنال: Economics and Philosophy
سال: 2009
ISSN: 0266-2671,1474-0028
DOI: 10.1017/s026626710999023x