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Randomization and ambiguity perception

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  • Yutaro Akita
  • Kensei Nakamura

Abstract

Ambiguity-averse decision makers typically dislike not only the presence of ambiguous events but also their increase, contrary to what standard ambiguity models predict. We axiomatically study such a decision maker. She avoids ex ante randomization over prospects since it only increases the number of relevant ambiguous events without providing a hedge against uncertainty. Our axioms lead to a representation in which the decision maker behaves as if optimizing her ambiguity perception at a cost. We show the uniqueness of the representation, and conduct comparatives of attitudes toward ambiguity and its increase. This identification is not achieved without considering ex ante randomization.

Suggested Citation

  • Yutaro Akita & Kensei Nakamura, 2025. "Randomization and ambiguity perception," Papers 2509.05076, arXiv.org, revised May 2026.
    • Handle: RePEc:arx:papers:2509.05076
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    File URL: http://arxiv.org/pdf/2509.05076
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