An Ellsberg paradox for ambiguity aversion

The 1961 Ellsberg paradox is typically seen as an empirical challenge to the subjective expected utility framework. Experiments based on Ellsberg's design have spawned a variety of new approaches, culminating in a new paradigm represented by, now classical, models of ambiguity aversion. We desi...

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Bibliographic Details
Published inarXiv.org
Main Authors Kuzmics, Christoph, Rogers, Brian W, Zhang, Xiannong
Format Paper
LanguageEnglish
Published Ithaca Cornell University Library, arXiv.org 09.01.2023
Subjects
Ambiguity
Decision theory
Paradoxes
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Summary:The 1961 Ellsberg paradox is typically seen as an empirical challenge to the subjective expected utility framework. Experiments based on Ellsberg's design have spawned a variety of new approaches, culminating in a new paradigm represented by, now classical, models of ambiguity aversion. We design and implement a decision-theoretic lab experiment that is extremely close to the original Ellsberg design and in which, empirically, subjects make choices very similar to those in the Ellsberg experiments. In our environment, however, these choices cannot be rationalized by any of the classical models of ambiguity aversion.
ISSN:2331-8422