Oechssler, Jörg ; Roomets, Alex
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Abstract
The Savage and the Anscombe-Aumann frameworks are the two most popular approaches used when modeling ambiguity. The former is more flexible, but the latter is often preferred for its simplicity. We conduct an experiment where subjects place bets on the joint outcome of an ambiguous urn and a fair coin. We document that more than a third of our subjects make choices that are incompatible with Anscombe-Aumann for any preferences, while the Savage framework is flexible enough to accountfor subjects' behaviors.
| Item Type: | Working paper |
|---|---|
| Series Name: | Discussion Paper Series / University of Heidelberg, Department of Economics |
| Volume: | 0672 |
| Place of Publication: | Heidelberg |
| Date Deposited: | 18 Oct 2019 09:53 |
| Date: | October 2019 |
| Number of Pages: | 15 |
| Faculties / Institutes: | The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics |
| Subjects: | 330 Economics |
| Uncontrolled Keywords: | Ellsberg paradox, ambiguity, experiment |
| Schriftenreihe ID: | Discussion Paper Series / University of Heidelberg, Department of Economics |
