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experimental investigation of multiple prior models of behaviour under ambiguity. Four models are considered: Expected Utility …, Smooth, Rank Dependent Expected Utility and Alpha model. The results of a mixture model which assigns subjects to types … Expected Utility and finally the Alpha type, whose decision time is always the lowest. Our results reflect the relative …
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We axiomatize a new class of recursive dynamic models that capture subjective constraints on the amount of information a decision maker can obtain, pay attention to, or absorb, via a Markov Decision Process for Information Choice (MIC). An MIC is a subjective decision process that specifies what...
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The distinction of risk vs uncertainty as made by Knight has important implications for policy selection. Assuming the former when the latter is relevant can lead to wrong decisions. With the aid of a stylized model that describes a bank’s decision on how to allocate loans, the authors discuss...
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