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

Author Info

  • Olivier L’Haridon

    ()

  • Lætitia Placido

    ()

Abstract

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.

(This abstract was borrowed from another version of this item.)

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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
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100341

Keywords: Ambiguity; Choquet expected utility; Experimental economics; C90; D81;

Other versions of this item:

Find related papers by JEL classification:
  • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
  • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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Cited by:

  1. Nascimento, Leandro, 2012. "The ex-ante aggregation of opinions under uncertainty," Theoretical Economics, Econometric Society, vol. 7(3), September.
  2. Laurent Denant-Boëmont & Olivier L’Haridon, 2013. "La rationalité à l'épreuve de l'économie comportementale," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 35-89.
  3. Roee Teper, 2015. "Subjective Independence and Concave Expected Utility," Working Paper 5865, Department of Economics, University of Pittsburgh.
  4. Kemel, Emmanuel & Paraschiv, Corina, 2013. "Prospect Theory for joint time and money consequences in risk and ambiguity," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 81-95.
  5. Laetitia Placido & Aurélien Baillon & Olivier L'Haridon, 2011. "Ambiguity models and the Machina paradoxes," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00645899, HAL.
  6. Blavatskyy, Pavlo R., 2013. "Two examples of ambiguity aversion," Economics Letters, Elsevier, vol. 118(1), pages 206-208.
  7. Ehud Lehrer & Roee Tepper, 2013. "Concave Expected Utility and Event Separability," Levine's Working Paper Archive 786969000000000809, David K. Levine.
  8. Abhinash Borah & Christopher Kops, 2016. "The Anscombe–Aumann representation and the independence axiom: a reconsideration," Theory and Decision, Springer, vol. 80(2), pages 211-226, February.

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