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Optimal allocations with α-MaxMin utilities, Choquet expected utilities, and Prospect Theory
Beißner, Patrick; Werner, Jan - In: Theoretical Economics 18 (2023) 3, pp. 993-1022
utility functions, where concavity is an expression of ambiguity aversion and/or risk aversion. This paper extends the … analysis to α-maxmin expected utility, Choquet expected utility, and Cumulative Prospect Theory, which accommodate ambiguity …
Persistent link: https://www.econbiz.de/10014537001
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Updating preferences with multiple priors
Klibanoff, Peter; Hanany, Eran - In: Theoretical Economics 2 (2007) 3, pp. 261-298
We propose and axiomatically characterize dynamically consistent update rules for decision making under ambiguity … of preferences over acts, to be able to reconcile typical behavior in the face of ambiguity (as exemplified by Ellsberg …
Persistent link: https://www.econbiz.de/10011599390
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Updating preferences with multiple priors
Klibanoff, Peter; Hanany, Eran - In: Theoretical Economics 2 (2007) 3
We propose and axiomatically characterize dynamically consistent update rules for decision making under ambiguity … of preferences over acts, to be able to reconcile typical behavior in the face of ambiguity (as exemplified by Ellsberg …
Persistent link: https://www.econbiz.de/10005812751
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Bayesian comparative statics
Mekonnen, Teddy; Leal Vizcaíno, René - In: Theoretical Economics 17 (2022) 1, pp. 219-251
We study how changes to the informativeness of signals in Bayesian games and single-agent decision problems affect the distribution of equilibrium actions. Focusing on supermodular environments, we provide conditions under which a more precise private signal for one agent leads to an...
Persistent link: https://www.econbiz.de/10013189084
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Indifference, indecisiveness, experimentation and stochastic choice
Ok, Efe A.; Tserenjigmid, Gerelt - In: Theoretical Economics 17 (2022) 2, pp. 651-686
Among the reasons behind the choice behavior of an individual taking a stochastic form are her potential indifference or indecisiveness between certain alternatives, and/or her willingness to experiment in the sense of occasionally deviating from choosing a best alternative in order to give a...
Persistent link: https://www.econbiz.de/10014536935
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Evolution, heritable risk and skewness loving
Heller, Yuval; Robson, Arthur John - In: Theoretical Economics 16 (2021) 2, pp. 403-424
Our understanding of risk preferences can be sharpened by considering their evolutionary basis. The existing literature has focused on two sources of risk: idiosyncratic risk and aggregate risk. We introduce a new source of risk, heritable risk, in which there is a positive correlation between...
Persistent link: https://www.econbiz.de/10013189056
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Optimal auctions with ambiguity
Bose, Subir; Ozdenoren, Emre; Pape, Andreas - In: Theoretical Economics 1 (2006) 4, pp. 411-438
unique distribution. In this paper we study the optimal auction problem allowing for ambiguity about the distribution of … valuations. Agents may be ambiguity averse (modeled using the maxmin expected utility model of Gilboa and Schmeidler 1989.) When … the bidders face more ambiguity than the seller we show that (i) given any auction, the seller can always (weakly …
Persistent link: https://www.econbiz.de/10011599377
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Coarse contingencies and ambiguity
Epstein, Larry G.; Marinacci, Massimo; Seo, Kyoungwon - In: Theoretical Economics 2 (2007) 4, pp. 355-394
The paper considers an agent who must choose an action today under uncertainty about the consequence of any chosen action but without having in mind a complete list of all the contingencies that could influence outcomes. She conceives of some relevant (subjective) contingencies but she is aware...
Persistent link: https://www.econbiz.de/10011599392
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Symmetry of evidence without evidence of symmetry
Epstein, Larry G.; Seo, Kyoungwon - In: Theoretical Economics 5 (2010) 3, pp. 313-368
The de Finetti Theorem is a cornerstone of the Bayesian approach. Bernardo (1996) writes that its "message is very clear: if a sequence of observations is judged to be exchangeable, then any subset of them must be regarded as a random sample from some model, and there exists a prior distribution...
Persistent link: https://www.econbiz.de/10011599431
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Dynamic choice under ambiguity
Siniscalchi, Marciano - In: Theoretical Economics 6 (2011) 3, pp. 379-421
This paper analyzes dynamic choice for ambiguity-sensitive decision makers. It demonstrates that unambiguous behavioral … sophisticated MEU preferences are then used to analyze the value of information under ambiguity; a basic trade-off between …
Persistent link: https://www.econbiz.de/10011599450