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A Smooth Model of Decision Making Under Ambiguity.

Abstract:

We propose and axiomatize a model of preferences over acts such that the decision maker prefers act f to act g if and only if Eμφ (Eπu ◦ f) ≥ Eμφ (Eπu ◦ g), where E is the expectation operator, u is a vN-M utility function, φ is an increasing transformation, and μ is a subjective probability over the set Π of probability measures π that the decision maker thinks are relevant given his subjective information. A key feature of our model is that it achieves a separation between ambiguity, identi...

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Publisher copy:
10.1111/j.1468-0262.2005.00640.x
Publisher:
Econometric Society
Journal:
Econometrica More from this journal
Volume:
73
Issue:
6
Pages:
1849 - 1892
Publication date:
2005-11-01
DOI:
ISSN:
0012-9682
Language:
English
UUID:
uuid:3258ccdb-0901-4e84-be6c-5ae18184fff6
Local pid:
oai:economics.ouls.ox.ac.uk:14150
Deposit date:
2011-08-16

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