EconPapers    
Economics at your fingertips  
 

Choices Under Ambiguity With Familiar And Unfamiliar Outcomes

Marcello Basili (), Alain Chateauneuf () and Fulvio Fontini

Theory and Decision, 2005, vol. 58, issue 2, 195-207

Abstract: This paper considers a decision-making process under ambiguity in which the decision-maker is supposed to split outcomes between familiar and unfamiliar ones. She is assumed to behave differently with respect to unfamiliar gains, unfamiliar losses and customary (familiar) outcomes. In particular, she is supposed to be pessimistic on gains, optimistic on losses and ambiguity neutral on the familiar outcomes. A generalization of the usual Choquet Integral is formalized when the decision maker holds capacities and probabilities. A characterization of the decision-maker’s behavior is provided for a specific subset of capacities, in which it is shown that the decision-maker underestimates the unfamiliar outcomes while is linear in probabilities on customary ones. Copyright Springer 2005

Keywords: ambiguity; capacity; choquet integral; representation theorem; cumulative prospect theory; D81 (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s11238-005-5682-6 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Choices under ambiguity with familiar and unfamilar outcomes (2005)
Working Paper: Choices under ambiguity with familiar and unfamiliar outcomes (2004) Downloads
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:kap:theord:v:58:y:2005:i:2:p:195-207

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-01-12
Handle: RePEc:kap:theord:v:58:y:2005:i:2:p:195-207