Exploring Ellsberg’s Paradox in Vague-Vague Cases

Karen M. Kramer and David V. Budescu
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Karen M. Kramer: Edward Hines Jr. Veterans Administration Medical Center
David V. Budescu: University of Illinois

Chapter Chapter 6 in Experimental Business Research, 2005, pp 131-154 from Springer

Abstract: Abstract We explore a generalization of Ellsberg’s paradox to the Vague-Vague (V-V) case, where neither of the probabilities (urns) is specified precisely, but one urn is always more precise than the other. We present results of an experiment explicitly designed to study this situation. The paradox was as prevalent in the V-V cases, as in the standard Precise-Vague (P-V) cases. The paradox occurred more often when differences between ranges of vagueness were large. Vagueness avoidance increased with midpoint for P-V cases, and decreased for V-V cases. Models that capture the relationships between vagueness avoidance and observable gamble characteristics (e.g., differences of ranges) were fitted.

Keywords: Ellsberg’s paradox; ambiguity avoidance; vagueness avoidance; vague probabilities; imprecise probabilities; probability ranges; logit models (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-0-387-24244-6_6

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DOI: 10.1007/0-387-24244-9_6

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