Ellsberg paradox
E564108
The Ellsberg paradox is a famous problem in decision theory and economics that demonstrates how people’s choices often violate expected utility theory due to ambiguity aversion.
All labels observed (1)
| Label | Occurrences |
|---|---|
| Ellsberg paradox canonical | 1 |
Statements (48)
| Predicate | Object |
|---|---|
| instanceOf |
decision theory paradox
ⓘ
economic paradox ⓘ thought experiment ⓘ |
| assumes | rational agents under classical theory ⓘ |
| canonicalSetup |
three-color urn problem
NERFINISHED
ⓘ
two-urn problem ⓘ |
| challenges | Savage axioms NERFINISHED ⓘ |
| contradicts | subjective expected utility theory ⓘ |
| demonstrates |
ambiguity aversion
ⓘ
preference for known risks over unknown risks ⓘ violation of expected utility theory ⓘ |
| describedIn | Risk, Ambiguity, and the Savage Axioms NERFINISHED ⓘ |
| empiricalFinding |
choices violate the sure-thing principle
ⓘ
most subjects prefer bets on known probabilities ⓘ |
| field |
behavioral economics
ⓘ
decision theory ⓘ economics ⓘ philosophy of probability ⓘ |
| hasInterpretation |
evidence of non-Bayesian behavior
ⓘ
evidence of preference for robustness ⓘ |
| influenced |
Choquet expected utility
NERFINISHED
ⓘ
maxmin expected utility theory ⓘ models of ambiguity-sensitive preferences ⓘ multiple priors models ⓘ |
| introducedBy | Daniel Ellsberg NERFINISHED ⓘ |
| involves |
ambiguous probabilities
ⓘ
choices under uncertainty ⓘ known probabilities ⓘ |
| keyConcept |
ambiguity
ⓘ
preference reversal ⓘ risk ⓘ subjective probability ⓘ |
| motivated |
alternative utility representations
ⓘ
research on ambiguity aversion ⓘ |
| observes | systematic deviations from classical rationality ⓘ |
| publicationYear | 1961 ⓘ |
| relatedTo |
Allais paradox
NERFINISHED
ⓘ
Knightian uncertainty NERFINISHED ⓘ ambiguity attitude ⓘ prospect theory NERFINISHED ⓘ |
| shows |
inconsistency in revealed preferences
ⓘ
non-additive beliefs ⓘ |
| typicalOutcome | preference patterns incompatible with single subjective prior ⓘ |
| usedIn |
behavioral finance
NERFINISHED
ⓘ
decision analysis ⓘ experimental economics ⓘ |
| usesExample | urn with balls of different colors ⓘ |
| violates | independence axiom ⓘ |
Referenced by (1)
Full triples — surface form annotated when it differs from this entity's canonical label.