Foundations Of Ambiguity And Economic Modelling
AbstractAre foundations of models of ambiguity-sensitive preferences too flawed to be usefully applied to economic models?ï¿½ Al-Najjar and Weinstein (2009) say such is indeed the case.ï¿½ In this paper, first, we point out that many of the key arguments by Al-Najjar and Weinstein do not apply to quite a few of the ambiguity preference models of more recent vintage, and therefore to that extent do not undermine the foundational aspects or applicability of ambiguity models in general.ï¿½ Second, we argue the focus in that paper on Ellsberg examples is an overly narrow concern; the Ellsberg examples have their uses but they are not the best context to understand why reasonable real-world agents may find acting with ambiguity-sensitive preferences normatively or prescriptively appealing.ï¿½ Finally, normative considerations aside, we submit that Al-Najjar and Weinstein are unduly dismissive of the power of such preferences to provide illuminating positive analyses of economic phenomena.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Economics and Philosophy.
Volume (Year): 25 (2009)
Issue (Month): 03 (November)
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Other versions of this item:
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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