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Recent developments in modelling preferences: Uncertainty and ambiguitiy

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  • Camerer, Colin F.
  • Weber, Martin

Abstract

In subjective expected utility (SEU) the decision weights people attach to events are their beliefs about the likelihood of events. Much empirical evidence, inspired by Ellsberg (1961) and others, shows that people prefer to bet on events they know more about, even when their beliefs are held constant. (They are averse to "ambiguity", or uncertainty about probability.) We review evidence, recent theoretical explanations, and applications of research on ambiguity and SEU.

Suggested Citation

  • Camerer, Colin F. & Weber, Martin, 1991. "Recent developments in modelling preferences: Uncertainty and ambiguitiy," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 275, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
  • Handle: RePEc:zbw:cauman:275
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    References listed on IDEAS

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    More about this item

    Keywords

    Ambiguity; uncertainty; Ellsberg paradox; non-expected utility;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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