How Much Ambiguity Aversion? Finding Indifferences between Ellsberg's Risky and Ambiguous Bets

Journal of Risk and Uncertainty 45 (3):215-38 (2012)
Authors
Alex Voorhoeve
London School of Economics
Abstract
Experimental results on the Ellsberg paradox typically reveal behavior that is commonly interpreted as ambiguity aversion. The experiments reported in the current paper find the objective probabilities for drawing a red ball that make subjects indifferent between various risky and uncertain Ellsberg bets. They allow us to examine the predictive power of alternative principles of choice under uncertainty, including the objective maximin and Hurwicz criteria, the sure-thing principle, and the principle of insufficient reason. Contrary to our expectations, the principle of insufficient reason performed substantially better than rival theories in our experiment, with ambiguity aversion appearing only as a secondary phenomenon.
Keywords Ambiguity Aversion  Ellsberg Paradox  Principle of Insufficient Reason  Hurwicz Criterion
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What Is Risk Aversion?H. Orri Stefánsson & Richard Bradley - 2019 - British Journal for the Philosophy of Science 70 (1):77-102.

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