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|Ignorance and Competence in Choices Under Uncertainty
Faro, José Heleno
|We propose a model of decision making that captures reluctance to bet when the decision maker (DM) perceives that she lacks adequate information or expertise about the underlying contingencies. On the other hand, the same DM can prefer to bet in situations where she feel specially knowledgeable or competent even the underlying contingencies have vague likelihood. This separation is motivated by the Heath and Tverskyís competence hypothesis as well as by the Fox and Tverskyís comparative ignorance e§ect. Formally, we characterize preference relations % over Anscombe-Aumann acts represented by J (f) = minp2CZAu(f)dp + maxp2CZAcu(f)dp, where u is an a¢ ne utility index on consequences, C is a nonempty, convex and (weak) compact subset of probabilities measures, and A is a referential chance event. In this model there is a clear separation of ambiguity attitudes. The case E A captures possible familiar target events while the case E Ac might refers to the case of relative ignorance concerning related contingencies. This model captures a special case of event dependence of ambiguity attitudes in which the well known maxmin model isa special case. We also characterizes the case where we have a Choquet Expected Utility representation.
|Keywords (english terms):
Comparative ignorance effect
Choquet expected utility.
|Ciências Sociais Aplicadas
|O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DO USUÁRIO VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITOR
|Appears in Collections:
|Coleção Insper Working Papers
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