Author:
Oechssler Jörg,Roomets Alex
Abstract
AbstractThe Savage and the Anscombe–Aumann frameworks are the two most popular approaches used when modeling ambiguity. The former is more flexible, but the latter is often preferred for its simplicity. We conduct an experiment where subjects place bets on the joint outcome of an ambiguous urn and a fair coin. We document that more than a third of our subjects make choices that are incompatible with Anscombe–Aumann for any preferences, while the Savage framework is flexible enough to account for subjects’ behaviors.
Funder
Franklin and Marshall College
Ruprecht-Karls-Universität Heidelberg
Publisher
Springer Science and Business Media LLC
Subject
Computer Science Applications,General Economics, Econometrics and Finance,General Social Sciences,Applied Psychology,Arts and Humanities (miscellaneous),Developmental and Educational Psychology,General Decision Sciences