IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v191y2021ics0022053120301253.html
   My bibliography  Save this article

Multiple priors and comparative ignorance

Author

Listed:
  • Kopylov, Igor

Abstract

Fox and Tversky (1995) observe comparative ignorance: people are more ambiguity averse when they evaluate ambiguous and clear prospects jointly rather than in isolation. To accommodate such patterns, I relax the multiple priors model and allow subjective sets of priors to depend on partitions that are generated by feasible prospects. All sets of priors are derived uniquely on the corresponding partitions. This model violates transitivity, but preserves all other axioms of Gilboa and Schmeidler (1989). A parsimonious special case identifies a threshold partition π such that all π-measurable prospects are ranked via a set of priors P, but all other comparisons rely on a distinct set P⁎. Another refinement derives partition-dependent probabilistic beliefs without imposing ambiguity aversion.

Suggested Citation

  • Kopylov, Igor, 2021. "Multiple priors and comparative ignorance," Journal of Economic Theory, Elsevier, vol. 191(C).
    • Handle: RePEc:eee:jetheo:v:191:y:2021:i:c:s0022053120301253
    DOI: 10.1016/j.jet.2020.105132
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053120301253
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2020.105132?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Enrico Rubaltelli & Rino Rumiati & Paul Slovic, 2010. "Do ambiguity avoidance and the comparative ignorance hypothesis depend on people’s affective reactions?," Journal of Risk and Uncertainty, Springer, vol. 40(3), pages 243-254, June.
    2. Chow, Clare Chua & Sarin, Rakesh K, 2001. "Comparative Ignorance and the Ellsberg Paradox," Journal of Risk and Uncertainty, Springer, vol. 22(2), pages 129-139, March.
    3. Masatlioglu, Yusufcan & Ok, Efe A., 2005. "Rational choice with status quo bias," Journal of Economic Theory, Elsevier, vol. 121(1), pages 1-29, March.
    4. Chew, Soo Hong & Sagi, Jacob S., 2008. "Small worlds: Modeling attitudes toward sources of uncertainty," Journal of Economic Theory, Elsevier, vol. 139(1), pages 1-24, March.
    5. Mitchell, Olivia S. & Utkus, Stephen P. (ed.), 2004. "Pension Design and Structure: New Lessons from Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780199273393.
    6. Sugden Robert, 1993. "An Axiomatic Foundation for Regret Theory," Journal of Economic Theory, Elsevier, vol. 60(1), pages 159-180, June.
    7. Fox, Craig R. & Weber, Martin, 2002. "Ambiguity Aversion, Comparative Ignorance, and Decision Context," Organizational Behavior and Human Decision Processes, Elsevier, vol. 88(1), pages 476-498, May.
    8. Stefan T. Trautmann & Ferdinand M. Vieider & Peter P. Wakker, 2011. "Preference Reversals for Ambiguity Aversion," Management Science, INFORMS, vol. 57(7), pages 1320-1333, July.
    9. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    10. Chew Soo Hong & Mark Ratchford & Jacob S. Sagi, 2018. "You Need to Recognise Ambiguity to Avoid It," Economic Journal, Royal Economic Society, vol. 128(614), pages 2480-2506, September.
    11. Craig R. Fox & Amos Tversky, 1995. "Ambiguity Aversion and Comparative Ignorance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 585-603.
    12. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-217, March.
    13. Diecidue, Enrico & Somasundaram, Jeeva, 2017. "Regret theory: A new foundation," Journal of Economic Theory, Elsevier, vol. 172(C), pages 88-119.
    14. David S. Ahn & Haluk Ergin, 2010. "Framing Contingencies," Econometrica, Econometric Society, vol. 78(2), pages 655-695, March.
    15. Dekel, Eddie, 1986. "An axiomatic characterization of preferences under uncertainty: Weakening the independence axiom," Journal of Economic Theory, Elsevier, vol. 40(2), pages 304-318, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohammed Abdellaoui & Horst Zank, 2023. "Source and rank-dependent utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(4), pages 949-981, May.
    2. Milos Borozan & Loreta Cannito & Barbara Luppi, 2022. "A tale of two ambiguities: A conceptual overview of findings from economics and psychology," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 6(S1), pages 11-21, July.
    3. Gary Charness & Edi Karni & Dan Levin, 2013. "Ambiguity attitudes and social interactions: An experimental investigation," Journal of Risk and Uncertainty, Springer, vol. 46(1), pages 1-25, February.
    4. Laure Cabantous & Denis Hilton, 2006. "De l'aversion à l'ambiguïté aux attitudes face à l'ambiguïté. Les apports d'une perspective psychologique en économie," Revue économique, Presses de Sciences-Po, vol. 57(2), pages 259-280.
    5. Jean Desrochers & J. Francois Outreville, 2013. "Uncertainty, Ambiguity and Risk Taking: an experimental investigation of consumer behavior and demand for insurance," ICER Working Papers 10-2013, ICER - International Centre for Economic Research.
    6. Füllbrunn, Sascha & Rau, Holger A. & Weitzel, Utz, 2014. "Does ambiguity aversion survive in experimental asset markets?," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PB), pages 810-826.
    7. Phoebe Koundouri & Nikitas Pittis & Panagiotis Samartzis, 2024. "Comparative Ignorance as an Explanation of Ambiguity Aversion and Ellsberg Choices: A Survey with a New Proposal for Bayesian Training," DEOS Working Papers 2408, Athens University of Economics and Business.
    8. Şule Güney & Ben R. Newell, 2019. "An exploratory investigation of the impact of evaluation context on ambiguity aversion," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(3), pages 335-348, May.
    9. repec:cup:judgdm:v:14:y:2019:i:3:p:335-348 is not listed on IDEAS
    10. Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, vol. 30(1), pages 66-89, January.
    11. Aurélien Baillon & Han Bleichrodt & Umut Keskin & Olivier L'Haridon & Author-Name: Chen Li, 2013. "Learning under ambiguity: An experiment using initial public offerings on a stock market," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201331, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    12. Craig S. Webb, 2017. "Purely subjective variational preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(1), pages 121-137, June.
    13. Junyi Chai & Zhiquan Weng & Wenbin Liu, 2021. "Behavioral Decision Making in Normative and Descriptive Views: A Critical Review of Literature," JRFM, MDPI, vol. 14(10), pages 1-14, October.
    14. Mercè Roca & Robin Hogarth & A. Maule, 2006. "Ambiguity seeking as a result of the status quo bias," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 175-194, May.
    15. Mohammed Abdellaoui & Han Bleichrodt & Cédric Gutierrez, 2023. "Unpacking Overconfident Behavior When Betting on Oneself," Post-Print hal-04383402, HAL.
    16. Casaca, Paulo & Chateauneuf, Alain & Faro, José Heleno, 2014. "Ignorance and competence in choices under uncertainty," Journal of Mathematical Economics, Elsevier, vol. 54(C), pages 143-150.
    17. Ilke Aydogan & Loic Berger & Valentina Bosetti & Ning Liu, 2018. "Three layers of uncertainty: an experiment," Working Papers 623, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    18. Stefan Trautmann & Ferdinand Vieider & Peter Wakker, 2008. "Causes of ambiguity aversion: Known versus unknown preferences," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 225-243, June.
    19. Aurélien Baillon & Yoram Halevy & Chen Li, 2022. "Experimental elicitation of ambiguity attitude using the random incentive system," Experimental Economics, Springer;Economic Science Association, vol. 25(3), pages 1002-1023, June.
    20. Anna Maffioletti & Michele Santoni, 2019. "Emotion and Knowledge in Decision Making under Uncertainty," Games, MDPI, vol. 10(4), pages 1-28, September.
    21. Olivier Armantier & Nicolas Treich, 2016. "The Rich Domain of Risk," Management Science, INFORMS, vol. 62(7), pages 1954-1969, July.

    More about this item

    Keywords

    Ambiguity aversion; Comparative ignorance; Intransitivity; Preference reversals; Partition dependence; Decision avoidance;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:191:y:2021:i:c:s0022053120301253. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.