Ellsberg paradox: ambiguity and complexity aversions compared

0459196 - NHÚ 2017 RIV US eng J - Článek v odborném periodiku
Kovářík, Jaromír - Levin, D. - Wang, T.
Ellsberg paradox: ambiguity and complexity aversions compared.
Journal of Risk and Uncertainty. Roč. 52, č. 1 (2016), s. 47-64. ISSN 0895-5646. E-ISSN 1573-0476
Grant CEP: GA ČR(CZ) GA14-22044S
Institucionální podpora: RVO:67985998
Klíčová slova: ambiguity * complexity * compound risk
Kód oboru RIV: AH - Ekonomie
Impakt faktor: 1.298, rok: 2016

We present a simple model where preferences with complexity aversion, rather than ambiguity aversion, resolve the Ellsberg paradox. We test our theory using laboratory experiments where subjects choose among lotteries that “range” from a simple risky lottery, through risky but more complex lotteries, to one similar to Ellsberg’s ambiguity urn. Our model ranks lotteries according to their complexity and makes different—at times contrasting—predictions than most models of ambiguity in response to manipulations of prizes. The results support that complexity aversion preferences play an important and separate role from beliefs with ambiguity aversion in explaining behavior under uncertainty.
Trvalý link: http://hdl.handle.net/11104/0259429