Harin, Alexander (2008): Solution of the Ellsberg paradox by means of the principle of uncertain future.
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The principle of uncertain future: the probability of a future event contains an (hidden) uncertainty. The first consequence of the principle: the real values of high probabilities are lower than the preliminarily determined ones; conversely, the real values of low probabilities can be higher than the preliminarily determined ones. The first consequence provides an uniform solution of the underweighting of high and the overweighting of low probabilities, of the Allais paradox, risk aversion, loss aversion, the equity premium puzzle, the “fourfold pattern” paradox, etc. The second consequence: the present probability system of a future event is incomplete. The second consequence provides a solution of the incompleteness of systems of preferences, of ambiguity aversion, of the Ellsberg paradox, etc.
|Item Type:||MPRA Paper|
|Original Title:||Solution of the Ellsberg paradox by means of the principle of uncertain future|
|Keywords:||uncertainty, risk, utility, choice, decisions, probability|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling
A - General Economics and Teaching > A1 - General Economics
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E17 - Forecasting and Simulation: Models and Applications
B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology
D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles
|Depositing User:||Alexander Harin|
|Date Deposited:||08 Apr 2008 20:42|
|Last Modified:||14 Jun 2016 08:57|
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