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 Machina’s 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 InfoPaper provided by HEC Paris in its series Les Cahiers de Recherche with number 909.
Length: 25 pages
Date of creation: 01 Oct 2008
Date of revision:
ambiguity; Choquet expected utility; experimental economics;
Other versions of this item:
- Olivier L’Haridon & Lætitia Placido, 2010. "Betting on Machina’s reflection example: an experiment on ambiguity," Theory and Decision, Springer, vol. 69(3), pages 375-393, September.
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-03 (All new papers)
- NEP-CBE-2009-06-03 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-06-03 (Experimental Economics)
- NEP-UPT-2009-06-03 (Utility Models & Prospect Theory)
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