A Variation on Ellsberg

Kfir Eliaz and Pietro Ortoleva

No 2011-6, Working Papers from Brown University, Department of Economics

Abstract: Ellsberg's experiment involved a gamble with no ambiguity (N) and a gam- ble where the prize that could be won is objectively known, but the winning probability depends on the (ambiguous) urn's composition (P). We extend this by including a gamble where the winning probability is objectively known, but the prize depends on the urn's composition (C), and also gambles where both the probability and the prize depend on the urn's composition, and can either be correlated positively (D) or negatively (M). Among transitive subjects who prefer N to P, 40% prefer D to N, 74% prefer D to P, 97% prefer D to M, and the modal ranking (about 39%) satis es D

Keywords: Ellsberg Paradox; Uncertainty Aversion; Ambiguity Aversion; MaxMin Expected Utility. (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-mic and nep-upt
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Citations: View citations in EconPapers (4)

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