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

  • L’Haridon, Olivier
  • Placido, Lætitia

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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Paper provided by HEC Paris in its series Les Cahiers de Recherche with number 909.

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Length: 25 pages
Date of creation: 01 Oct 2008
Date of revision:
Handle: RePEc:ebg:heccah:0909
Contact details of provider: Postal: HEC Paris, 78351 Jouy-en-Josas cedex, France
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