Multiple priors and comparative ignorance

Igor Kopylov

Journal of Economic Theory, 2021, vol. 191, issue C

Abstract: Fox and Tversky (1995) observe comparative ignorance: people are more ambiguity averse when they evaluate ambiguous and clear prospects jointly rather than in isolation. To accommodate such patterns, I relax the multiple priors model and allow subjective sets of priors to depend on partitions that are generated by feasible prospects. All sets of priors are derived uniquely on the corresponding partitions. This model violates transitivity, but preserves all other axioms of Gilboa and Schmeidler (1989). A parsimonious special case identifies a threshold partition π such that all π-measurable prospects are ranked via a set of priors P, but all other comparisons rely on a distinct set P⁎. Another refinement derives partition-dependent probabilistic beliefs without imposing ambiguity aversion.

Keywords: Ambiguity aversion; Comparative ignorance; Intransitivity; Preference reversals; Partition dependence; Decision avoidance (search for similar items in EconPapers)
JEL-codes: D81 D83 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053120301253
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:191:y:2021:i:c:s0022053120301253

DOI: 10.1016/j.jet.2020.105132

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().