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Maxmin expected utility with additivity on unambiguous events

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  • Qu, Xiangyu

Abstract

This paper provides a model of beliefs representation in which ambiguity and unambiguity are endogenously distinguished in the maxmin expected utility model of Gilboa and Schmeidler (1989). Specifically, I first extend it by getting a representation of beliefs such that the probabilistic beliefs over each ambiguous event are represented by a nondegenerate interval, while the ones over each unambiguous event are represented by a number. I then suggest a behavioral definition of ambiguity. It provides a choice theoretical foundation for the Knightian distinction between ambiguity and unambiguity.

Suggested Citation

  • Qu, Xiangyu, 2013. "Maxmin expected utility with additivity on unambiguous events," Journal of Mathematical Economics, Elsevier, vol. 49(3), pages 245-249.
  • Handle: RePEc:eee:mateco:v:49:y:2013:i:3:p:245-249
    DOI: 10.1016/j.jmateco.2013.02.004
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    References listed on IDEAS

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    Cited by:

    1. Xiangyu Qu, 2015. "Purely subjective extended Bayesian models with Knightian unambiguity," Theory and Decision, Springer, vol. 79(4), pages 547-571, December.

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