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Decisions with conflicting and imprecise information

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  • Thibault Gajdos

    ()

  • Jean-Christophe Vergnaud

    ()

Abstract

When facing situations involving uncertainty, experts might provide imprecise and conflicting opinions. Recent experiments have shown that decision makers display aversion towards both disagreement among experts and imprecision of information. We provide an axiomatic foundation for a decision criterion that allows one to distinguish on a behavioral basis the decision maker’s attitude towards imprecision and disagreement. This criterion accommodates patterns of preferences observed in experiments that are precluded by two-steps procedures, where information is first aggregated, and then used by the decision maker. This might be seen as an argument for having experts transmitting a more detailed information to the decision maker. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00355-012-0691-1
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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 41 (2013)
Issue (Month): 2 (July)
Pages: 427-452

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Handle: RePEc:spr:sochwe:v:41:y:2013:i:2:p:427-452

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References

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  2. David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
  3. Gajdos, Thibault & Tallon, Jean-Marc & Vergnaud, Jean-Christophe, 2004. "Decision making with imprecise probabilistic information," Journal of Mathematical Economics, Elsevier, vol. 40(6), pages 647-681, September.
  4. MONGIN, Philippe, 1993. "Consistent Bayesian Aggregation," CORE Discussion Papers 1993019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. repec:hal:cesptp:halshs-00451982 is not listed on IDEAS
  6. Crès, Hervé & Gilboa, Itzhak & Vieille, Nicolas, 2011. "Aggregation of multiple prior opinions," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2563-2582.
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  9. Itzhak Gilboa & Dov Samet & David Schmeidler, 2001. "Utilitarian Aggregation of Beliefs and Tastes," Game Theory and Information 0105001, EconWPA.
  10. Gajdos, T. & Hayashi, T. & Tallon, J.-M. & Vergnaud, J.-C., 2008. "Attitude toward imprecise information," Journal of Economic Theory, Elsevier, vol. 140(1), pages 27-65, May.
  11. Chambers, Christopher P. & Echenique, Federico, 2012. "When does aggregation reduce risk aversion?," Games and Economic Behavior, Elsevier, vol. 76(2), pages 582-595.
  12. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
  13. Peter A. Morris, 1977. "Combining Expert Judgments: A Bayesian Approach," Management Science, INFORMS, vol. 23(7), pages 679-693, March.
  14. Gajdos, T. & Tallon, J.-M. & Vergnaud, J.-C., 2008. "Representation and aggregation of preferences under uncertainty," Journal of Economic Theory, Elsevier, vol. 141(1), pages 68-99, July.
  15. Laure Cabantous & Denis Hilton & Howard Kunreuther & Erwann Michel-Kerjan, 2011. "Is imprecise knowledge better than conflicting expertise? Evidence from insurers’ decisions in the United States," Journal of Risk and Uncertainty, Springer, vol. 42(3), pages 211-232, June.
  16. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  17. Smithson, Michael, 1999. "Conflict Aversion: Preference for Ambiguity vs Conflict in Sources and Evidence," Organizational Behavior and Human Decision Processes, Elsevier, vol. 79(3), pages 179-198, September.
  18. Peter A. Morris, 1974. "Decision Analysis Expert Use," Management Science, INFORMS, vol. 20(9), pages 1233-1241, May.
  19. Laure Cabantous, 2007. "Ambiguity Aversion in the Field of Insurance: Insurers’ Attitude to Imprecise and Conflicting Probability Estimates," Theory and Decision, Springer, vol. 62(3), pages 219-240, May.
  20. Chateauneuf, Alain, 1991. "On the use of capacities in modeling uncertainty aversion and risk aversion," Journal of Mathematical Economics, Elsevier, vol. 20(4), pages 343-369.
  21. Laure Cabantous & Denis Hilton & Howard Kunreuther & Erwann Michel-Kerjan, 2010. "Is Imprecise Knowledge Better than Conflicting Expertise? Evidence from Insurers’ Decisions in the United States," ICBBR Working Papers 7, International Centre for Behavioural Business Research.
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Citations

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Cited by:
  1. Crès, Hervé & Gilboa, Itzhak & Vieille, Nicolas, 2011. "Aggregation of multiple prior opinions," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2563-2582.
  2. 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.
  3. Théodora Dupont-Courtade, 2012. "Insurance demand under ambiguity and conflict for extreme risks: Evidence from a large representative survey," Documents de travail du Centre d'Economie de la Sorbonne 12020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  4. Laure Cabantous & Denis Hilton & Howard Kunreuther & Erwann Michel-Kerjan, 2011. "Is imprecise knowledge better than conflicting expertise? Evidence from insurers’ decisions in the United States," Journal of Risk and Uncertainty, Springer, vol. 42(3), pages 211-232, June.
  5. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09iepso50rh is not listed on IDEAS
  6. Théodora Dupont-Courtade, 2012. "Insurance demand under ambiguity and conflict for extreme risks : Evidence from a large representative survey," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00718642, HAL.
  7. Nascimento, Leandro, 2012. "The ex-ante aggregation of opinions under uncertainty," Theoretical Economics, Econometric Society, vol. 7(3), September.
  8. Hill, Brian, 2012. "Unanimity and the aggregation of multiple prior opinions," Les Cahiers de Recherche 959, HEC Paris.
  9. Aurélien Baillon & Laure Cabantous & Peter Wakker, 2012. "Aggregating imprecise or conflicting beliefs: An experimental investigation using modern ambiguity theories," Journal of Risk and Uncertainty, Springer, vol. 44(2), pages 115-147, April.

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