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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 4, Number 2 (June 2009) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/17410

Title: Choice deferral and ambiguity aversion
Authors: Igor Kopylov; Department of Economics and Institute for Mathematical Behavioral Sciences, University of California, Irvine
Keywords: Choice deferral, ambiguity aversion, epsilon contamination, multiple priors model, subjective probability, Ellsberg Paradox
D81, D83
Issue Date: 9-Jun-2009
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 4, No 2 (2009)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] When confronted with uncertain prospects, people often exhibit both choice deferral and Ellsberg-type ambiguity aversion. This paper obtains a joint representation for these behavioral phenomena. The decision maker as portrayed by my model is willing to choose an uncertain prospect f over g rather than to defer this choice if and only if the expected utility of f is greater that or equal to the expected utility of g for every probability measure in a convex and closed set Delta. This set is interpreted as a collection of the decision maker's possible future beliefs. When choices cannot be deferred, the decision maker evaluates every uncertain prospect via an epsilon-mixture of the least favorable element in the set Delta and her current probabilistic belief p in Delta. All components of my model are derived from observable preferences in an essentially unique way.
URI: http://hdl.handle.net/1807/17410
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20090199
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 4, Number 2 (June 2009)

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