Recursive Ambiguity and Machina’s Examples
Machina (2009, 2012) lists a number of situations where standard models of ambiguity aversion are unable to capture plausible features of ambiguity attitudes. Most of these problems arise in choice over prospects involving three or more outcomes. We show that the recursive non-expected utility model of Segal (1987) is rich enough to accommodate all these situations.
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"Ambiguity models and the Machina paradoxes,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
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Econometric Society, vol. 73(6), pages 1849-1892, November.
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- Yoram Halevy, 2007.
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