Carbone, Enrica, Dong, Xueqi and Hey, John Denis orcid.org/0000-0001-6692-1484 (2017) Elicitation of Preferences under Ambiguity. Journal of Risk and Uncertainty. pp. 87-102. ISSN 0895-5646
Abstract
This paper is about behaviour under ambiguity ‒ that is, a situation in which probabilities either do not exist or are not known. Our objective is to find the most empirically valid of the increasingly large number of theories attempting to explain such behaviour. We use experimentally-generated data to compare and contrast the theories. The incentivised experimental task we employed was that of allocation: in a series of problems we gave the subjects an amount of money and asked them to allocate the money over three accounts, the payoffs to them being contingent on a ‘state of the world’ with the occurrence of the states being ambiguous. We reproduced ambiguity in the laboratory using a Bingo Blower. We fitted the most popular and apparently empirically valid preference functionals [Subjective Expected Utility (SEU), MaxMin Expected Utility (MEU) and α-MEU], as well as Mean-Variance (MV) and a heuristic rule, Safety First (SF). We found that SEU fits better than MV and SF and only slightly worse than MEU and α-MEU.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2017 |
Keywords: | allocations, ambiguity, preferences under ambiguity |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 20 Jun 2017 15:30 |
Last Modified: | 07 Feb 2025 00:15 |
Published Version: | https://doi.org/10.1007/s11166-017-9256-0 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.1007/s11166-017-9256-0 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:117968 |
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