Ellsberg Meets Nash: the Ellsberg Task as a Game

Modeling the Ellsberg Paradox by Argument Strength

We present a formal measure of argument strength, which combines the ideas that conclusions of strong arguments are (i) highly probable and (ii) their uncertainty is relatively precise. Likewise, arguments are weak when their conclusion probability is low or when it is highly imprecise. We show how the proposed measure provides a new model of the Ellsberg paradox. Moreover, we further substanti...

Smarter in the Long-Term: Diminishing Ambiguity Aversion in a Repeated Ellsberg Urn Task

Testosterone and Cortisol Jointly Predict the Ambiguity Premium in an Ellsberg-Urns Experiment

Previous literature has tried to establish whether and how steroid hormones are related to economic risk-taking. In this study, we investigate the relationship between testosterone (T) and cortisol (C) on one side and attitudes toward risk and ambiguity on the other. We asked 78 male undergraduate students to complete several tasks and provide two saliva samples. In the task "Reveal the Bag," p...

A Quantum Cognition Analysis of the Ellsberg Paradox

The expected utility hypothesis is one of the foundations of classical approaches to economics and decision theory and Savage’s Sure-Thing Principle is a fundamental element of it. It has been put forward that real-life situations exist, illustrated by the Allais and Ellsberg paradoxes, in which the Sure-Thing Principle is violated, and where also the expected utility hypothesis does not hold. ...

The Subjective Approach to Ambiguity: A Critical Assessment∗

We provide a critical assessment of the (subjective) ambiguity 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 avers...