Risk, Ambiguity, and the Savage Axioms: Comment

Ambiguity attitudes, framing, and consistency

“…A small world is a decision situation in which: (i) the subject knows every possible aspect of the situation, or state of the world, which is unaffected by their choice and which, together with their choice, will determine the consequences they want to take into account; and (ii) the subject knows the relevant consequences of every possible act in every such state of the world. If the Ellsberg experiment is conceived of as a small-world problem, it should generate rational behaviour that is ambiguity neutral (Raiffa 1961;Al-Najjar and Weinstein 2009). Our finding that the most consistent subjects are predominantly ambiguity neutral is therefore at least to some extent in line with the orthodox theory of rationality.…”

Choice Under Uncertainty: Problems Solved and Unsolved

“…When faced with the choice of staking a prize on: (R,) drawing a red ball from the first urn, (R,) drawing a red ball from the second urn, (B,) drawing a black ball from the first urn, or (B,) drawing a black ball from the second urn, a majority of subjects strictly preferred (R,) over (R2) and strictly preferred (B,) over (B2).It is clear that there can exist no subjectively assigned probabilities p: (1 -p ) of drawing a red vs. black ball from the second urn, even 1/2 : 1/2, which can simultaneously generate both of these strict preferences. Similar behavior in this and related problems has been observed by Raiffa (1961), Becker and Brownson (1964), Slovic and Tversky (1974) and MacCrimmon and Larsson (1979).…”

Ambiguity Seeking as a Result of the Status Quo Bias

“…Ellsberg, 1961;Raiffa, 1961;Becker & Brownson, 1964;Yates & Zukowsi, 1976;Cohen, Jaffray, & Said, 1985;Eisenberger & Weber, 1995). The support for Hypothesis 1.2 (Status quo) is important in that, to our knowledge, it is the first time that being endowed with an ambiguous gamble has been shown to reduce ambiguity avoidance.…”