Journal of Risk and Uncertainty

, Volume 5, Issue 4, pp 325–370

Recent developments in modeling preferences: Uncertainty and ambiguity

Authors

  • Colin Camerer
    • Graduate School of BusinessUniversity of Chicago
  • Martin Weber
    • Lehrstuhl fur Allg. Betriebswirtschaftslehre und EntscheidungsforschungChristian-Albrechts-Universitat
Symposium on Risk and Ambiguity

DOI: 10.1007/BF00122575

Cite this article as:
Camerer, C. & Weber, M. J Risk Uncertainty (1992) 5: 325. doi:10.1007/BF00122575

Abstract

In subjective expected utility (SEU), the decision weights people attach to events are their beliefs about the likelihood of events. Much empirical evidence, inspired by Ellsberg (1961) and others, shows that people prefer to bet on events they know more about, even when their beliefs are held constant. (They are averse to ambiguity, or uncertainty about probability.) We review evidence, recent theoretical explanations, and applications of research on ambiguity and SEU.

Key words

ambiguityuncertaintyEllsberg paradoxnonexpected utility

Copyright information

© Kluwer Academic Publishers 1992