The Price for Information about Probabilities and its Relation with Capacities
AbstractIn this paper ambiguity aversion is measured through the maximum price the decision maker is willing to pay in order to know the probability of an event. Two comparative problems are examined in which the decision maker faces an act: in one case buying information implies playing a lottery, while in the other case buying information gives also the option to avoid playing the lottery. In both decision settings, relying on Choquet expected utility model, we study how the decision maker’s risk and ambiguity attitudes affect the reservation price for information. These effects are analyzed for different levels of ambiguity of the act.
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Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 10-193.
Date of creation: Sep 2010
Date of revision:
Ambiguity aversion; Choquet expected utility; Information about probabilities;
Other versions of this item:
- Giuseppe Attanasi & Aldo Montesano, 2010. "The Price for Information about Probabilities and its Relation with Capacities," Labsi Experimental Economics Laboratory University of Siena 031, University of Siena.
- Attanasi, Giuseppe & Montesano, Aldo, 2010. "The Price for Information about Probabilities and its Relation with Capacities," LERNA Working Papers 10.16.322, LERNA, University of Toulouse.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-16 (All new papers)
- NEP-EXP-2010-10-16 (Experimental Economics)
- NEP-UPT-2010-10-16 (Utility Models & Prospect Theory)
You can help add them by filling out this form.
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