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COPING RATIONALLY WITH AMBIGUITY: ROBUSTNESS VERSUS AMBIGUITY-AVERSION

Published online by Cambridge University Press:  10 November 2009

Klaus Nehring
Klaus Nehring*
Affiliation:
University of California, Davis
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Abstract

Al-Najjar and Weinstein (2009) argue that the extant literature on ambiguity aversion is not successful in accounting for Ellsberg choices as rational responses to ambiguity. We concur, and propose that rational choice under ambiguity aims at robustness rather than avoidance of ambiguity. A central argument explains why robust choice is intrinsically context-dependent and legitimately violates standard choice consistency conditions. If choice consistency is forced, however, ambiguity-aversion emerges as a semi-rational response to ambiguity.

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Type
Essay
Information
Economics & Philosophy , Volume 25 , Issue 3: Economics and Philosophy on Ambiguity Aversion , November 2009 , pp. 303 - 334
Copyright
Copyright © Cambridge University Press 2009

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