A BAYESIAN APPROACH TO UNCERTAINTY AVERSION

@inproceedings{Halevy1999ABA,
  title={A BAYESIAN APPROACH TO UNCERTAINTY AVERSION},
  author={Yoram Halevy and Vincent Feltkamp},
  year={1999}
}
The Ellsberg paradox demonstrates that people's belief over uncertain events might not be representable by subjective probability. We relate this paradox to other commonly observed anomalies, such as a rejection of the backward induction prediction in the one-shot Ultimatum Game. We argue that the pattern common to these observations is that the behavior is governed by “rational rules” . These rules have evolved and are optimal within the repeated and concurrent environments that people usually… CONTINUE READING

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