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Betting on Machina’s reflection example: an experiment on ambiguity

  • Olivier L’Haridon

    ()

  • Lætitia Placido

    ()

In a recent paper, Machina (2008) suggested choice problems in the spirit of Ellsberg (1961) which challenge tail-separability, an implication of Choquet Expected Utility (CEU) to a similar extent as the Ellsberg paradox challenged the sure-thing principle implied by Subjective Expected Utility (SEU). We have tested choice behavior for bets on one of Machina’s choice problems, the reflection example. Our results indicate that tail-separability is violated by a large majority of subjects (over 70% of the sample). These empirical findings complement the theoretical analysis of Machina (2008) and, together, they confirm the need for new approaches in the analysis of ambiguity for decision making.

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File URL: http://hdl.handle.net/10.1007/s11238-008-9128-9
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Article provided by Springer in its journal Theory and Decision.

Volume (Year): 69 (2010)
Issue (Month): 3 (September)
Pages: 375-393

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Handle: RePEc:kap:theord:v:69:y:2010:i:3:p:375-393
DOI: 10.1007/s11238-008-9128-9
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/economic+theory/journal/11238/PS2

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