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More Ambiguous or More Complex? An Investigation of Individual Preferences under Uncertainty

Author

Listed:
  • Ilke Aydogan
  • Loïc Berger
  • Vincent Théroude

Abstract

This paper explores the drivers of individual preferences under uncertainty. We propose a characterization of the situations of model uncertainty such as the ones introduced by Ellsberg (1961) by building on the more ambiguous relations of Jewitt and Mukerji (2017) and Izhakian (2020) and on two new more complex relations. Reconsidering existing data sets from the recent literature and combining them with new experimental evidence, we show that uncertainty preferences can be driven by considerations regarding both the degree of complexity and ambiguity that a situation entails.

Suggested Citation

  • Ilke Aydogan & Loïc Berger & Vincent Théroude, 2023. "More Ambiguous or More Complex? An Investigation of Individual Preferences under Uncertainty," Working Papers of BETA 2023-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2023-10
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    File URL: http://beta.u-strasbg.fr/WP/2023/2023-10.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Ambiguity; model uncertainty; complexity; Ellsberg paradox.;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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