Related papers: A Contextual Risk Model for the Ellsberg Paradox
The 'expected utility hypothesis' and 'Savage's Sure-Thing Principle' are violated in real life decisions, as shown by the 'Allais' and 'Ellsberg paradoxes'. The popular explanation in terms of 'ambiguity aversion' is not completely…
Uncertainty in economics still poses some fundamental problems illustrated, e.g., by the Allais and Ellsberg paradoxes. To overcome these difficulties, economists have introduced an interesting distinction between 'risk' and 'ambiguity'…
The 'expected utility hypothesis' is one of the foundations of classical approaches to economics and decision theory and Savage's 'Sure-Thing Principle' is a fundamental element of it. It has been put forward that real-life situations…
The 1961 Ellsberg paradox is typically seen as an empirical challenge to the subjective expected utility framework. Experiments based on Ellsberg's design have spawned a variety of new approaches, culminating in a new paradigm represented…
Empirical evidence has confirmed that quantum effects occur frequently also outside the microscopic domain, while quantum structures satisfactorily model various situations in several areas of science, including biological, cognitive and…
Expected utility theory (EUT) is widely used in economic theory. However, its subjective probability formulation, first elaborated by Savage, is linked to Ellsberg-like paradoxes and ambiguity aversion. This has led various scholars to work…
Ambiguity and ambiguity aversion have been widely studied in decision theory and economics both at a theoretical and an experimental level. After Ellsberg's seminal studies challenging subjective expected utility theory (SEUT), several…
We provide here a general mathematical framework to model attitudes towards ambiguity which uses the formalism of quantum theory as a ``purely mathematical formalism, detached from any physical interpretation''. We show that the…
The expected utility hypothesis is one of the building blocks of classical economic theory and founded on Savage's Sure-Thing Principle. It has been put forward, e.g. by situations such as the Allais and Ellsberg paradoxes, that real-life…
{\it Ellsberg thought experiments} and empirical confirmation of Ellsberg preferences pose serious challenges to {\it subjective expected utility theory} (SEUT). We have recently elaborated a quantum-theoretic framework for human decisions…
The Ellsberg and Machina paradoxes reveal that expected utility theory is problematical when real subjects take decisions under uncertainty. Suitable generalizations of expected utility exist which attempt to solve the Ellsberg paradox, but…
The Machina thought experiments pose to major non-expected utility models challenges that are similar to those posed by the Ellsberg thought experiments to subjective expected utility theory (SEUT). We test human choices in the `Ellsberg…
The applications of techniques from statistical (and classical) mechanics to model interesting problems in economics and finance has produced valuable results. The principal movement which has steered this research direction is known under…
We provide and axiomatize a representation for preferences over lotteries that generalizes the expected utility model. Since the representation uses different utility functions to evaluate different lotteries, the preferences can be…
In the present article we use the quantum formalism to describe the effects of risk and ambiguity in decision theory. The main idea is that the probabilities in the classic theory of expected utility are estimated probabilities, and thus do…
In this paper, we propose an interpretation of the Hilbert space method used in quantum theory in the context of decision making under uncertainty. For a clear comparison we will stay as close as possible to the framework of SEU suggested…
Despite the impressive success of quantum structures to model long-standing human judgement and decision puzzles, the {\it quantum cognition research programme} still faces challenges about its explanatory power. Indeed, quantum models…
In this paper, we introduce a new model of selection behavior under risk that describes an essential cognitive process for comparing values of objects and making a selection decision. This model is constructed by the quantum-like approach…
Kolmogorov's foundation of probability takes measure spaces, $\sigma$-algebras, and probability measures as basic objects. It is, however, widely recognized that this classical framework is inadequate for random phenomena involving quantum…
We conduct an incentivized experiment on a nationally representative US sample \\ (N=708) to test whether people prefer to avoid ambiguity even when it means choosing dominated options. In contrast to the literature, we find that 55\% of…