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What Is Partial Ambiguity?

Author

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  • Loic Berger

    (CNRS, IESEG School of Management, Univ. Lille, UMR 9221–LEM, F-59000 Lille, France; and Bocconi University, Italy)

Abstract

This paper reflects on the notion of partial ambiguity. Using a framework de-composing ambiguity into distinct layers of analysis, among which are risk and model uncertainty, and allowing for different attitudes toward these layers, I show that partial ambiguity may prove less desirable thanfull ambiguity, even under ambiguity aversion. This observation poses difficulties for interpreting the notion of partial ambiguity in relation to the partial information available to determine the potential compositions of an ambiguous urn. Two Ellsberg-style thought experiments are described to challenge the meaning of partial ambiguity further, and an alternative interpretation, based on a more ambiguous relation, is discussed.

Suggested Citation

  • Loic Berger, 2021. "What Is Partial Ambiguity?," Working Papers 2021-iRisk-01, IESEG School of Management.
    • Handle: RePEc:ies:wpaper:e202103
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    References listed on IDEAS

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    1. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
    2. Hansen, Lars Peter, 2013. "Uncertainty Outside and Inside Economic Models," Nobel Prize in Economics documents 2013-7, Nobel Prize Committee.
    3. Segal, Uzi, 1987. "The Ellsberg Paradox and Risk Aversion: An Anticipated Utility Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 175-202, February.
    4. Ilke Aydogan & Loïc Berger & Valentina Bosetti & Ning Liu, 2023. "Three Layers of Uncertainty," Journal of the European Economic Association, European Economic Association, vol. 21(5), pages 2209-2236.
    5. Kops, Christopher & Pasichnichenko, Illia, 2020. "A Test of Information Aversion," Working Papers 0682, University of Heidelberg, Department of Economics.
    6. Jewitt, Ian & Mukerji, Sujoy, 2017. "Ordering ambiguous acts," Journal of Economic Theory, Elsevier, vol. 171(C), pages 213-267.
    7. Schmeidler, David, 1989. "Subjective Probability and Expected Utility without Additivity," Econometrica, Econometric Society, vol. 57(3), pages 571-587, May.
    8. Ilke Aydogan & Loïc Berger & Valentina Bosetti & Ning Liu, 2020. "Three layers of uncertainty and the role of model misspecification," Working Papers hal-03031751, HAL.
    9. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    10. Berger, Loïc & Bosetti, Valentina, 2020. "Characterizing ambiguity attitudes using model uncertainty," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 621-637.
    11. Lars Peter Hansen, 2014. "Nobel Lecture: Uncertainty Outside and Inside Economic Models," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 945-987.
    12. Kyoungwon Seo, 2009. "Ambiguity and Second-Order Belief," Econometrica, Econometric Society, vol. 77(5), pages 1575-1605, September.
    13. Daniel Ellsberg, 1961. "Risk, Ambiguity, and the Savage Axioms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 75(4), pages 643-669.
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    Cited by:

    1. Ilke Aydogan & Loïc Berger & Valentina Bosetti, 2023. "Unraveling Ambiguity Aversion," Post-Print hal-04370668, HAL.
    2. Ilke Aydogan & Loïc Berger & Vincent Théroude, 2023. "More Ambiguous or More Complex? An Investigation of Individual Preferences under Uncertainty," Working Papers of BETA 2023-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. repec:hal:wpaper:hal-04071242 is not listed on IDEAS
    4. Ilke AYDOGAN & Loïc BERGER & Vincent THEROUDE, 2023. "More Ambiguous or More Complex? An Investigation of Individual Preferences under Model Uncertainty," Working Papers 2023-iRisk-02, IESEG School of Management.

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    More about this item

    Keywords

    Ambiguity; model uncertainty; smooth ambiguity aversion; Ellsberg para-dox;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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