Summary.
Suppose that an economic agent is \((1-\varepsilon) \times\)100% certain that uncertainty she faces is characterized by a particular probability measure, but that she has a fear that, with \(\varepsilon \times\)100% chance, her conviction is completely wrong and she is left perfectly ignorant about the true measure in the present as well as in the future. This situation is often called “\(\varepsilon\)-contamination of confidence.” The purpose of this paper is to provide a simple set of behavioral axioms under which the decision-maker’s preference is represented by the Choquet expected utility with the \(\varepsilon\)-contamination of confidence.
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Received: 25 November 2002, Revised: 15 November 2004,
JEL Classification Numbers:
D81.
Correspondence to: Hiroyuki Ozaki
We are grateful to an anonymous referee. The referee’s comments greatly improved the exposition of the paper. The work reported here is partially supported by a grant from the Economic and Social Research Insitute, the Cabinet Office, the Government of Japan.
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Nishimura, K.G., Ozaki, H. An axiomatic approach to \(\boldsymbol{\varepsilon}\)-contamination. Economic Theory 27, 333–340 (2006). https://doi.org/10.1007/s00199-004-0584-3
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DOI: https://doi.org/10.1007/s00199-004-0584-3