A Quantum Cognition Analysis of the Ellsberg Paradox
The expected utility hypothesis is one of the foundations of classical approaches to economics and decision theory and Savage’s Sure-Thing Principle is a fundamental element of it. It has been put forward that real-life situations exist, illustrated by the Allais and Ellsberg paradoxes, in which the Sure-Thing Principle is violated, and where also the expected utility hypothesis does not hold. We have recently presented strong arguments for the presence of a double layer structure, a classical logical and a quantum conceptual, in human thought and that the quantum conceptual mode is responsible of the above violation. We consider in this paper the Ellsberg paradox, perform an experiment with real test subjects on the situation considered by Ellsberg, and use the collected data to elaborate a model for the conceptual landscape surrounding the decision situation of the paradox. We show that it is the overall conceptual landscape which gives rise to a violation of the Sure-Thing Principle and leads to the paradoxical situation discovered by Ellsberg.
KeywordsSure-Thing Principle Ellsberg paradox conceptual landscape quantum cognition
Unable to display preview. Download preview PDF.
- 11.Aerts, D., D’Hooghe, B.: Classical Logical Versus Quantum Conceptual Thought: Examples in Economics, Decision Theory and Concept Theory. In: Bruza, P., Sofge, D., Lawless, W., van Rijsbergen, K., Klusch, M. (eds.) QI 2009. LNCS, vol. 5494, pp. 128–142. Springer, Heidelberg (2009)CrossRefGoogle Scholar
- 12.Aerts, D.: Quantum Interference and Superposition in Cognition: Development of a Theory for the Disjunction of Concepts. In: Aerts, D., D’Hooghe, B., Note, N. (eds.) Worldviews, Science and Us: Bridging Knowledge and Its Implications for Our Perspectives of the World. World Scientific, Singapore (2011) (in print) Archive reference and link, http://arxiv.org/abs/0705.1740 (2007)Google Scholar
- 13.Aerts, D.: General Quantum Modeling of Combining Concepts: A Quantum Field Model in Fock Space (2007), Archive reference and link: http://arxiv.org/abs/0705.1740
- 14.Aerts, D., Broekaert, J., Czachor, M., D’Hooghe, B.: A Quantum-Conceptual Explanation of Violations of Expected Utility in Economics. In: Song, D., et al. (eds.) QI 2011. LNCS, vol. 7052, pp. 192–198. Springer, Heidelberg (2011)Google Scholar
- 16.Franco, R.: Risk, Ambiguity and Quantum Decision Theory(2007), Archive reference and link: http://arxiv.org/abs/0711.0886
- 19.Knight, F.H.: Risk, Uncertainty and Profit. Houghton Mifflin, Boston (1921)Google Scholar
- 20.Aerts, D., Sozzo, S.: Contextual risk and its relevance in economics. Accepted for Publication in J. Eng. Sci. Tech. Rev. (2011)Google Scholar
- 21.Aerts, D., Sozzo, J.: A contextual risk model for the Ellsberg paradox. Accepted for Publication in J. Eng. Sci. Tech. Rev. (2011)Google Scholar