Dispersed Behavior and Perceptions in Assortative Societies
Mira Frick (),
Ryota Iijima () and
Yves Le Yaouanq
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Mira Frick: Cowles Foundation, Yale University, http://economics.yale.edu/people/mira-frick
Ryota Iijima: Cowles Foundation, Yale University, http://economics.yale.edu/people/ryota-iijima
Yves Le Yaouanq: Ludwig-Maximilians-Universität, Munich
No 2180, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University
We propose a multiple-prior model of preferences under ambiguity that provides a unified lens through which to understand different formalizations of ambiguity aversion, as well as context-dependent negative and positive ambiguity attitudes documented in experiments. This model, Boolean expected utility (BEU), represents the belief the decision-maker uses to evaluate any uncertain prospect as the outcome of a game between two conflicting forces, Pessimism and Optimism. We prove, first, that BEU provides a novel representation of the class of invariant biseparable preferences (Ghirardato, Maccheroni, and Marinacci, 2004). Second, BEU accommodates rich patterns of ambiguity attitudes, which we characterize in terms of the relative power allocated to each force in the game.
Keywords: Multiple priors; Ambiguity aversion (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Pages: 39 pages
New Economics Papers: this item is included in nep-mic and nep-upt
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