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Ambiguity, data and preferences for information – A case-based approach

Jürgen Eichberger and Ani Guerdjikova

Journal of Economic Theory, 2013, vol. 148, issue 4, 1433-1462

Abstract: We model decision making under ambiguity based on available data. Decision makers express preferences over actions and data sets. We derive an α-max–min representation of preferences, in which beliefs combine objective characteristics of the data (number and frequency of observations) with subjective features of the decision maker (similarity of observations and perceived ambiguity). We identify the subjectively perceived ambiguity and separate it into ambiguity due to a limited number of observations and ambiguity due to data heterogeneity. The special case of no ambiguity provides a behavioral foundation for beliefs as similarity-weighted frequencies as in Billot et al. (2005) [3].

Keywords: Case-based decisions; Ambiguity; Similarity; Optimism; Pessimism; Preferences for information precision (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Ambiguity, Data and Preferences for Information - A Case-Based Approach (2012) Downloads
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DOI: 10.1016/j.jet.2013.04.002

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