Betting on Machina's reflection example: an experiment on ambiguity

Olivier L'Haridon and Laetitia Placido
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Laetitia Placido: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: In a recent article, Machina (Am Econ Rev forthcoming, 2008) suggested choice problems in the spirit of Ellsberg (Q J Econ 75:643-669, 1961), which challenge tail-separability, an implication of Choquet expected utility (CEU), to a similar extent as the Ellsberg paradox challenged the sure-thing principle implied by subjective expected utility (SEU). We have tested choice behavior for bets on one of Machina's choice problems, the reflection example. Our results indicate that tail-separability is violated by a large majority of subjects (over 70% of the sample). These empirical findings complement the theoretical analysis of Machina (Am Econ Rev forthcoming, 2008) and, together, they confirm the need for new approaches in the analysis of ambiguity for decision making.

Keywords: Choquet expected utility; Experimental economics; Ambiguity (search for similar items in EconPapers)
Date: 2010-09
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Citations: View citations in EconPapers (14)

Published in Theory and Decision, 2010, 69 (3), pp.375-393. ⟨10.1007/s11238-008-9128-9⟩

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Related works:
Journal Article: Betting on Machina’s reflection example: an experiment on ambiguity (2010)
Working Paper: Betting on Machina's reflection example: an experiment on ambiguity (2010)
Working Paper: Betting on Machina's reflection example: an experiment on ambiguity (2010)
Working Paper: Betting on Machina's reflection example: an experiment on ambiguity (2008)
Working Paper: Betting on Machina's reflection example: an Experiment on Ambiguity (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-00528380

DOI: 10.1007/s11238-008-9128-9

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