Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150128
Authors: 
Kopylov, Igor
Year of Publication: 
2009
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 4 [Year:] 2009 [Issue:] 2 [Pages:] 199-225
Abstract: 
When confronted with uncertain prospects, people often exhibit both choice deferral and Ellsberg-type ambiguity aversion. This paper obtains a joint representation for these behavioral phenomena. The decision maker as portrayed by my model is willing to choose an uncertain prospect f over g rather than to defer this choice if and only if the expected utility of f is greater that or equal to the expected utility of g for every probability measure in a convex and closed set Delta. This set is interpreted as a collection of the decision maker's possible future beliefs. When choices cannot be deferred, the decision maker evaluates every uncertain prospect via an epsilon-mixture of the least favorable element in the set Delta and her current probabilistic belief p in Delta. All components of my model are derived from observable preferences in an essentially unique way.
Subjects: 
Choice deferral
ambiguity aversion
epsilon contamination
multiple priors model
subjective probability
Ellsberg Paradox
JEL: 
D81
D83
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0
Document Type: 
Article

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