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Ambiguity as a Source of Temptation: Modeling Unstable Beliefs

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  • André Lapied

    (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))

  • Thomas Rongiconi

    ()
    (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))

Abstract

The "General-Self-Control-Preference" model introduced by Noor and Takeoka (2010) allows to take into account non linear costs of Self-Control. In this paper we extend this theory to situations in which a decision-maker faces ambiguity. We focus on the fact that lack of information is a potential source of temptation. Indeed lack of information doesn't allow the decision-maker to put a probability measure on uncertain events. Our basic hypothesis is that, in ambiguous situation, individuals are not confident enough about their beliefs and could therefore be tempted to use other beliefs to evaluate the alternatives in the second period. We study a two period model where ex ante dominated choice may tempt the decision-maker in the second period. Individuals have preferences over sets of alternatives that represent second period choices. We provide a Choice-Theoretic model where the ex ante belief is a probability measure whereas ex post belief is a Choquet-capacity, in order to take into account individual attitudes towards ambiguity in the second period.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00797631.

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Date of creation: Mar 2013
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Handle: RePEc:hal:wpaper:halshs-00797631

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Keywords: Temptation; Self-control; Ambiguity; Choquet-Expected-Utility; Comonotonic-Temptation-Independence;

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  1. Itzhak Gilboa & Andrew W. Postlewaite & David Schmeidler, 2008. "Probability and Uncertainty in Economic Modeling," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 173-88, Summer.
  2. Alain Chateauneuf & Robert Kast & André Lapied, 2001. "Conditioning Capacities and Choquet Integrals: The Role of Comonotony," Theory and Decision, Springer, vol. 51(2), pages 367-386, December.
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