Testing Ambiguity and Machina Preferences Within a Quantum-theoretic Framework for Decision-making

Diederik Aerts (), Suzette Geriente, Catarina Moreira and Sandro Sozzo

Papers from arXiv.org

Abstract: 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 all data on the Ellsberg and Machina paradox situations. 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.

Date: 2017-06
New Economics Papers: this item is included in nep-exp and nep-upt
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Journal Article: Testing ambiguity and Machina preferences within a quantum-theoretic framework for decision-making (2018)
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