Choices Under Ambiguity With Familiar And Unfamiliar Outcomes
AbstractThis paper considers a decision-making process under ambiguity in which the decision-maker is supposed to split outcomes between familiar and unfamiliar ones. She is assumed to behave differently with respect to unfamiliar gains, unfamiliar losses and customary (familiar) outcomes. In particular, she is supposed to be pessimistic on gains, optimistic on losses and ambiguity neutral on the familiar outcomes. A generalization of the usual Choquet Integral is formalized when the decision maker holds capacities and probabilities. A characterization of the decision-makerâ€™s behavior is provided for a specific subset of capacities, in which it is shown that the decision-maker underestimates the unfamiliar outcomes while is linear in probabilities on customary ones. Copyright Springer 2005
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Bibliographic InfoArticle provided by Springer in its journal Theory and Decision.
Volume (Year): 58 (2005)
Issue (Month): 2 (03)
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Web page: http://www.springerlink.com/link.asp?id=100341
ambiguity; capacity; choquet integral; representation theorem; cumulative prospect theory; D81;
Other versions of this item:
- Marcello Basili & Alain Chateauneuf & Fulvio Fontini, 2004. "Choices under ambiguity with familiar and unfamiliar outcomes," Cahiers de la Maison des Sciences Economiques b04115, Université Panthéon-Sorbonne (Paris 1).
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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