Ambiguity and the Bayesian Paradigm

Gilboa, Itzhak; Marinacci, Mássimo

doi:10.1007/978-3-319-20451-2_21

Cited by 166 publications

(147 citation statements)

References 193 publications

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“…Klibanoff et al (2005), Gilboa et al (2010) and Gilboa and Marinacci (2011). It also appears in game theoretic applications-the concept of ambiguous games is introduced in Marinacci (2000).…”

Section: The Form Of Beliefs and Anticipated Payoffs Considered In Thmentioning

confidence: 99%

Belief distorted Nash equilibria: introduction of a new kind of equilibrium in dynamic games with distorted information

Wiszniewska-Matyszkiel¹

2015

Ann Oper Res

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In this paper the concept of belief distorted Nash equilibrium (BDNE) is introduced. It is a new concept of equilibrium for games in which players have incomplete, ambiguous or distorted information about the game they play, especially in a dynamic context. The distortion of information of a player concerns the fact how the other players and/or an external system changing in response to players' decisions, are going to react to his/her current decision. The concept of BDNE encompasses a broader concept of pre-BDNE, which reflects the fact that players best respond to their beliefs, and self-verification of those beliefs. The relations between BDNE and Nash or subjective equilibria are examined, as well as the existence and properties of BDNE. Examples are presented, including models of a common ecosystem, repeated Cournot oligopoly, a repeated Minority Game or local public good with congestion effect and a repeated Prisoner's Dilemma.

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Section: The Form Of Beliefs and Anticipated Payoffs Considered In Thmentioning

confidence: 99%

Belief distorted Nash equilibria: introduction of a new kind of equilibrium in dynamic games with distorted information

Wiszniewska-Matyszkiel¹

2015

Ann Oper Res

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“…The following theorem characterizes the solution of the insured's problem (Problem (9)) in terms of the solution of the relatively easier quantile problem given in Problem (12), provided the previous assumptions hold. The proof is given in Appendix C.…”

Section: Assumptionmentioning

confidence: 99%

“…Amarante [11] introduces a model of decision under ambiguity that includes the aforementioned ones. We refer to the recent survey of Gilboa and Marinacci [12] for more on this topic, including other models of decision under ambiguity and applications of these models to several problems in economic theory.…”

Section: Introductionmentioning

confidence: 99%

Optimal Insurance for a Minimal Expected Retention: The Case of an Ambiguity-Seeking Insurer

Amarante

Ghossoub

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: In the classical expected utility framework, a problem of optimal insurance design with a premium constraint is equivalent to a problem of optimal insurance design with a minimum expected retention constraint. When the insurer has ambiguous beliefs represented by a non-additive probability measure, as in Schmeidler, this equivalence no longer holds. Recently, Amarante, Ghossoub and Phelps examined the problem of optimal insurance design with a premium constraint when the insurer has ambiguous beliefs. In particular, they showed that when the insurer is ambiguity-seeking, with a concave distortion of the insured's probability measure, then the optimal indemnity schedule is a state-contingent deductible schedule, in which the deductible depends on the state of the world only through the insurer's distortion function. In this paper, we examine the problem of optimal insurance design with a minimum expected retention constraint, in the case where the insurer is ambiguity-seeking. We obtain the aforementioned result of Amarante, Ghossoub and Phelps and the classical result of Arrow as special cases. Terms of use: Documents in

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“…1 The meaning given to each of these terms varies according to different schools of thought. In Aristotle's Nicomachean Ethics, the decision relates to the available resources needed to reach a given, desirable, conclusion, while Cartesians (e.g.…”

Section: Introductionmentioning

confidence: 99%

“…Leibniz argues in his Theodicy (1710) that understanding is not a necessity-it only provides a guide-and that the decision exists only through the effort of action. In terms of expected utility theory [1], Odysseus rationally opted for the path that minimized the maximum damage.…”

Section: Introductionmentioning

confidence: 99%

Decision-Making in Extreme Situations Following the Fukushima Daiichi Accident

Travadel

2017

Resilience: A New Paradigm of Nuclear Safety

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The Fukushima Daiichi accident raises questions about current decision-making models. Faced with an overwhelming situation, which threatened both their own lives and that of the entire population, the plant's operators were obliged to take action, despite the lack of resources. In these conditions, decision making cannot be reduced to an optimization exercise based on a range of possibilities, or the application of planned operational responses to an emergency situation. The inevitable catastrophe, the social pressure it generates, the moral dilemmas it creates and the psychological drivers for action are characteristic of an extreme situation. The action plan must therefore be reinvented and individuals mobilised to these ends. It is therefore in a broader context of 'action' that decision making takes shape, and finds its logical foundations, meaning and temporality. Understanding decision making in extreme situations first requires a grasp of the development of a specific value system (that is mediated by the physical experience of the situation) in which the individual and social representations play a central role.

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Ambiguity and the Bayesian Paradigm

Cited by 166 publications

References 193 publications

Belief distorted Nash equilibria: introduction of a new kind of equilibrium in dynamic games with distorted information

Belief distorted Nash equilibria: introduction of a new kind of equilibrium in dynamic games with distorted information

Optimal Insurance for a Minimal Expected Retention: The Case of an Ambiguity-Seeking Insurer

Decision-Making in Extreme Situations Following the Fukushima Daiichi Accident

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