On the Smooth Ambiguity Model: A Reply
AbstractWe find that Epstein (2010)'s Ellsberg-style thought experiments pose, contrary to his claims, no paradox or difficulty for the smooth ambiguity model of decision making under uncertainty developed by Klibanoff, Marinacci and Mukerji (2005). Not only are the thought experiments naturally handled by the smooth ambiguity model, but our reanalysis shows that they highlight some of its strengths compared to models such as the maxmin expected utility model (Gilboa and Schmeidler (1989)). In particular, these examples pose no challenge to the model's foundations, interpretation of the model as affording a separation of ambiguity and ambiguity attitude or the potential for calibrating ambiguity attitude in the model.
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Bibliographic InfoPaper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 410.
Date of creation: 2011
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Other versions of this item:
- Sujoy Mukerji & Peter Klibanoff, 2009. "On the Smooth Ambiguity Model: A Reply," Economics Series Working Papers 449, University of Oxford, Department of Economics.
- Peter Klibano & Massimo Marinacci & Sujoy Mukerji, 2009. "On the Smooth Ambiguity Model: A Reply," Levine's Working Paper Archive 814577000000000344, David K. Levine.
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - 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-2011-09-16 (All new papers)
- NEP-HPE-2011-09-16 (History & Philosophy of Economics)
- NEP-MIC-2011-09-16 (Microeconomics)
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