Similar Search Results

Allais, Ellsberg, and preferences for hedging

Dean, Mark; Ortoleva, Pietro - In: Theoretical economics : TE ; an open access journal in … 12 (2017) 1, pp. 377-424

Two of the most well known regularities observed in preferences under risk and uncertainty are ambiguity aversion and the Allais paradox. We study the behav- ior of an agent who can display both tendencies simultaneously. We introduce a novel notion of preference for hedging that applies to both...

Persistent link: https://www.econbiz.de/10011704845

Stochastic representation decision theory : how probabilities and values are entangled dual characteristics in cognitive processes

Ferro, Giuseppe M.; Sornette, Didier - 2020

replace the normative rational expectation theory at the foundation of economics. These approaches essentially assume that … theory (Kahneman and Tversky, 1979): the inverse S-shaped subjective probability as a function of the objective probability … Navarrete, 1998) while it does not when the dominance is “evident”. Our theory, which offers many more predictions for future …

Persistent link: https://www.econbiz.de/10012219210

Chapter 1. Axiomatic Foundations of Expected Utility and Subjective Probability

Karni, Edi - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 1-39). 2014

This chapter provides a critical review of the theories of decision making under risk and under uncertainty and the notion of choice-based subjective probabilities. It includes formal statements and discussions of the various models, including their analytical frameworks, the corresponding...

Persistent link: https://www.econbiz.de/10014025531

Dynamic objective and subjective rationality

José Faro, Heleno; Lefort, Jean-Philippe - In: Theoretical economics : TE ; an open access journal in … 14 (2019) 1, pp. 1-14

We characterize prior-by-prior Bayesian updating using a model proposed by Gilboa, Maccheroni, Marinacci and Schmeidler (2010) that jointly considers objective and subjective rationality. These rationality concepts are subject to the Bewley unanimity rule and maxmin expected utility,...

Persistent link: https://www.econbiz.de/10012020227

Predicting the unpredictable under subjective expected utility

Schipper, Burkhard - 2024 - This Version: March 2, 2024

mutations in statistics, combinatorial probability theory, and population genetics. Partition exchangeable beliefs do not …

Persistent link: https://www.econbiz.de/10015069541

Learning under ambiguity : a note on the belief dynamics of Epstein and Schneider (2007)

Heyen, Daniel - 2014

Epstein and Schneider (2007) develop a framework of learning under ambiguity, generalizing maxmin preferences of Gilboa and Schmeidler (1989) to intertemporal settings. The specific belief dynamics in Epstein and Schneider (2007) rely on the rejection of initial priors that have become...

Persistent link: https://www.econbiz.de/10010424809

Expected Utility and Equilibrium with Subjective Choice Sets and Strategic Reporting

Di Caprio, Debora - 2012

This paper studies an economy where agents trade using a shared language, so that they do not need to meet in person with goods physically present. Agents provide vague descriptions of proposed net trades, which we interpret as arising either from inherent limitations in what the agents can...

Persistent link: https://www.econbiz.de/10013100429

Ambiguity and Overconfidence

Brenner, Menachem - 2015

There are two phenomena in behavioral finance and economics which are seemingly unrelated and have been studied separately; overconfidence and ambiguity aversion. In this paper we are trying to link these two phenomena providing a theoretical foundation supported by evidence from an experimental...

Persistent link: https://www.econbiz.de/10013038229

Experimental evidence on the relationship between perceived ambiguity and likelihood insensitivity

Henkel, Luca - 2022

Observed individual behavior in the presence of ambiguity is characterized by insufficient responsiveness to changes in subjective likelihoods. Such likelihood insensitivity under ambiguity is integral to theoretical models and predictive of behavior in many important domains such as financial...

Persistent link: https://www.econbiz.de/10013163191

Dynamic Consistency and Ambiguity : A Reappraisal

Hill, Brian - 2019

It is commonly argued that dynamic consistency, consequentialism and non-expected utility are incompatible. The first aim of this paper is to rebut such arguments, by targeting the implicit assumption that the relevant contingencies correspond to objective resolutions of uncertainty (that is,...

Persistent link: https://www.econbiz.de/10012905335