Betting on Machina’s reflection example: an experiment on ambiguity
AbstractIn a recent paper, Machina (2008) suggested choice problems in the spirit of Ellsberg (1961) which challenge tail-separability, an implication of Choquet Expected Utility (CEU) to a similar extent as the Ellsberg paradox challenged the sure-thing principle implied by Subjective Expected Utility (SEU). We have tested choice behavior for bets on one of Machinaâs choice problems, the reflection example. Our results indicate that tail-separability is violated by a large majority of subjects (over 70% of the sample). These empirical findings complement the theoretical analysis of Machina (2008) and, together, they confirm the need for new approaches in the analysis of ambiguity for decision making.
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Bibliographic InfoArticle provided by Springer in its journal Theory and Decision.
Volume (Year): 69 (2010)
Issue (Month): 3 (September)
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Web page: http://www.springerlink.com/link.asp?id=100341
Ambiguity; Choquet expected utility; Experimental economics; C90; D81;
Other versions of this item:
- L’Haridon, Olivier & Placido, Lætitia, 2008. "Betting on Machina's reflection example: an experiment on ambiguity," Les Cahiers de Recherche 909, HEC Paris.
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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