Updating ambiguity averse preferences Best horny wechat contacts

An ambiguity-averse individual would rather choose an alternative where the probability distribution of the outcomes is known over one where the probabilities are unknown.

This behavior was first introduced through the Ellsberg paradox (people prefer to bet on the outcome of an urn with 50 red and 50 blue balls rather than to bet on one with 100 total balls but for which the number of blue or red balls is unknown).

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141-153]) and the multiplier preferences of Hansen and Sargent [American Economic Review 91(2) 2001, pp. For smooth ambiguity preferences, we also identify a simple rule that is shown to be the unique dynamically consistent rule among a large class of rules that may be expressed as reweightings of Bayes's rule.

Keywords: Updating; Dynamic Consistency; Ambiguity; Regret; Ellsberg; Bayesian; Consequentialism; Smooth Ambiguity (search for similar items in Econ Papers) JEL-codes: D81 D83 D91 (search for similar items in Econ Papers) New Economics Papers: this item is included in nep-cba and nep-upt Date: 2008-07 References: View references in Econ Papers View complete reference list from Cit Ec Citations View citations in Econ Papers (1) Track citations by RSS feed Downloads: (external link) text (application/pdf) Related works: This item may be available elsewhere in Econ Papers: Search for items with the same title.

As applications of our general result, we characterize dynamically consistent updating for two important models of ambiguity averse preferences: the ambiguity averse smooth ambiguity preferences as special cases.

For smooth ambiguity preferences, we also identify a simple rule that is shown to be the unique dynamically consistent rule among a large class of rules that may be expressed as reweightings of the Bayes' rule.

In this paper, we characterize dynamically consistent update rules for preference models satisfying ambiguity aversion.

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