More Ambiguous or More Complex? An Investigation of Individual Preferences under Model Uncertainty

Ilke Aydogan (), Loïc Berger and Vincent Theroude ()
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Ilke Aydogan: IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France; and iRisk Research Center on Risk and Uncertainty
Vincent Theroude: Université de Lorraine, Université de Strasbourg, CNRS, BETA, 54000, Nancy, France

Working Papers from IESEG School of Management

Abstract: WeThis paper explores the drivers of individual preferences under uncertainty. We propose a characterization of the situations of model uncertainty such as the ones introduced by Ellsberg (1961) by building on the more ambiguous relations of Jewitt and Mukerji (2017) and Izhakian (2020) and on two new more complex relations. Re- considering existing data sets from the recent literature and combining them with new experimental evidence, we show that uncertainty preferences can be driven by considerations regarding both the degree of complexity and ambiguity that a situation entails.

Keywords: : Ambiguity; model uncertainty; complexity; Ellsberg paradox (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2023-03
New Economics Papers: this item is included in nep-upt
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