Related papers: A Two-Ball Ellsberg Paradox: An Experiment
We introduce a way to compare actions in decision problems. One action is safer than another if the set of beliefs at which the decision-maker prefers the safer action expands as the decision-maker becomes more risk averse. We provide a…
Situations where people have to decide between hurting themselves or another person are at the core of many individual and global conflicts. Yet little is known about how people behave when facing these situations in the lab. Here we report…
We designed and ran an experiment to test how often people's choices are reversed by others' recommendations when facing different levels of confirmation and conformity pressures. In our experiment participants were first asked to provide…
Consider the following game: You are given two indistinguishable envelopes, each containing money. One contains twice as much as the other. You may pick one envelope and keep the money it contains. Having chosen an envelope, you are given…
We study an ensemble of individuals playing the two games of the so-called Parrondo paradox. In our study, players are allowed to choose the game to be played by the whole ensemble in each turn. The choice cannot conform to the preferences…
This paper investigates the dynamics of gambling and how they can affect risk-taking behavior in regions not explored by Kahneman and Tversky's Prospect Theory. Specifically, it questions why extreme outcomes do not fit the theory and…
Various strategies for active learning have been proposed in the machine learning literature. In uncertainty sampling, which is among the most popular approaches, the active learner sequentially queries the label of those instances for…
We study a modification of the so-called Parrondo's paradox where a large number of individuals choose the game they want to play by voting. We show that it can be better for the players to vote randomly than to vote according to their own…
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…
We model learning in a continuous-time Brownian setting where there is prior ambiguity. The associated model of preference values robustness and is time-consistent. It is applied to study optimal learning when the choice between actions can…
Theoretically as well as experimentally it is investigated how people represent their knowledge in order to make decisions or to share their knowledge with others. Experiment 1 probes into the ways how people 6ather information about the…
A decision maker starts from a judgmental decision and moves to the closest boundary of the confidence interval. This statistical decision rule is admissible and does not perform worse than the judgmental decision with a probability equal…
The principle that rational agents should maximize expected utility or choiceworthiness is intuitively plausible in many ordinary cases of decision-making under uncertainty. But it is less plausible in cases of extreme, low-probability risk…
We study a strategic experimentation game with exponential bandits, in which experiment outcomes are private. The equilibrium amount of experimentation is always higher than in the benchmark case where experiment outcomes are publicly…
Completeness and transitivity are standard rationality conditions in economics. However, under ambiguity, decision makers sometimes violate these requirements because of the difficulty of forming accurate predictions about ambiguous events.…
Senders of messages prefer to communicate uncertainty verbally (e.g., something is likely to happen) rather than numerically (such as 75%), leaving receivers with imprecise information. While it is well established that receivers translate…
This paper studies sequential information acquisition by an ambiguity-averse decision maker (DM), who decides how long to collect information before taking an irreversible action. The agent optimizes against the worst-case belief and…
This paper investigates the problem of finding a preference relation on a set of acts from the knowledge of an ordering on events (subsets of states of the world) describing the decision-maker (DM)s uncertainty and an ordering of…
This paper studies a new and more general axiomatization than one presented previously for preference on likelihood gambles. Likelihood gambles describe actions in a situation where a decision maker knows multiple probabilistic models and a…
We run experimental asset markets to investigate the emergence of excess trading and the occurrence of synchronised trading activity leading to crashes in the artificial markets. The market environment favours early investment in the risky…