Testing ambiguity and Machina preferences within a quantum-theoretic framework for decision-making
Catarina Moreira and
Journal of Mathematical Economics, 2018, vol. 78, issue C, 176-185
The Machina thought experiments pose to major non-expected utility models challenges that are similar to those posed by the Ellsberg thought experiments to subjective expected utility theory (SEUT). We test human choices in the ‘Ellsberg three-color example’, confirming typical ambiguity aversion patterns, and the ‘Machina 50/51 and reflection examples’, partially confirming the preferences hypothesized by Machina. Then, we show that a quantum-theoretic framework for decision-making under uncertainty recently elaborated by some of us allows faithful modeling of the collected data. In the quantum-theoretic framework, subjective probabilities are represented by quantum probabilities, while quantum state transformations enable representations of ambiguity aversion and subjective attitudes toward it.
Keywords: Expected utility theory; Ambiguity aversion; Machina paradox; Quantum structures; Quantum probability (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:78:y:2018:i:c:p:176-185
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