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Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities

  • Grant, Simon

    (Rice U)

  • Chateauneuf, A.

    (Universite Paris I)

  • Eichberger, J.

    (Universitat Heidelberg)

The concept of a non-extreme-outcome-additive capacity (neo-additive capacity ) is introduced. Neo-additive capacities model optimistic and pessimistic attitudes towards uncertainty as observed in many experimental studies. Moreover, neo-additive capacities can be applied easily in economic problems, as we demonstrate by examples. This paper provides an axiomatisation of Choquet expected utility with neo-capacities in a framework of purely subjective uncertainty.

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File URL: http://www.ruf.rice.edu/~econ/papers/2002papers/10Grant.pdf
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Paper provided by Rice University, Department of Economics in its series Working Papers with number 2002-10.

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Date of creation: Sep 2002
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Handle: RePEc:ecl:riceco:2002-10
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