Ignorance and competence in choices under uncertainty

Paulo Casaca, Alain Chateauneuf and José Heleno Faro
Additional contact information
Paulo Casaca: FIEMG - Federação das Indústrias do Estado de Minas Gerais, CEDEPLAR - Centre for Development and Regional Planning - UFMG - Universidade Federal de Minas Gerais = Federal University of Minas Gerais [Belo Horizonte, Brazil]
José Heleno Faro: Instituto de Ensino e Pesquisa (Brazil) - Insper Institute of Education and Research

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We propose a model of decision making that captures reluctance to bet when the decision maker (DM) perceives that she lacks adequate information or expertise about the underlying contingencies. On the other hand, the same DM can prefer to bet in situations where she feels specially knowledgeable or competent even if the underlying contingencies have vague likelihoods. This separation in terms of sources of uncertainty is motivated by the Heath and Tversky's competence hypothesis as well as by the Fox and Tversky's comparative ignorance effect. Formally, we characterize preference relations ≿ over Anscombe-Aumann acts represented by [formule] where u is an affine utility index on consequences, C is a nonempty, convex and (weak∗) compact subset of probabilities measures, and A is a referential chance event . In this model there is a clear separation of ambiguity attitudes. The case E⊂A captures possible familiar target events while the case E⊂Ac might refer to the case of relative ignorance concerning related contingencies. This model captures a special case of event dependence of ambiguity attitudes in which the well known maxmin model is a special case. We also characterize the case where we have a Choquet Expected Utility representation.

Keywords: Ambiguity; Competence hypothesis; Comparative ignorance effect; Maxmin preferences; Choquet expected utility (search for similar items in EconPapers)
Date: 2014-10
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published in Journal of Mathematical Economics, 2014, 54, pp.143-150. ⟨10.1016/j.jmateco.2014.02.005⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Ignorance and competence in choices under uncertainty (2014)
Working Paper: Ignorance and competence in choices under uncertainty (2014)
Working Paper: Ignorance and Competence in Choices Under Uncertainty (2013)
Working Paper: Ignorance and Competence in Choices Under Uncertainty (2013)
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:hal:cesptp:hal-01015299

DOI: 10.1016/j.jmateco.2014.02.005

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().