Portal de Periódicos da CAPES

Ambiguity Made Precise: A Comparative Foundation

2002; Elsevier BV; Volume: 102; Issue: 2 Linguagem: Inglês

10.1006/jeth.2001.2815

1095-7235

Paolo Ghirardato, Mássimo Marinacci,

Economic theories and models

The theory of subjective expected utility has been recently extended to allow ambiguity to matter for choice. We propose a notion of absolute ambiguity aversion by building on a notion of comparative ambiguity aversion. We characterize it for a preference model which encompasses some of the most popular models in the literature. We next build on these ideas to provide a definition of unambiguous act and event and show the characterization of the latter. As an illustration, we consider the classical Ellsberg 3-color urn problem and find that the notions developed in the paper provide intuitive answers. Journal of Economic Literature Classification Number: D81.