FIRST INTERNATIONAL SYMPOSIUM ON
IMPRECISE PROBABILITIES AND THEIR APPLICATIONS

Ghent, Belgium
30 June - 2 July 1999

ELECTRONIC PROCEEDINGS

Karen M. Kramer and David V. Budescu

Modeling Ellsberg's Paradox in Vague-Vague Cases

Abstract

We explore a generalization of Ellsberg's paradox (2-color scenario) to the Vague-Vague (V-V) case, in which neither of the probabilities (urns) is specified precisely, but one urn is always more precise than the other. One hundred and seven undergraduate students compared 63 pairs of urns involving positive outcomes. The paradox is as prevalent in the V-V case, as in the standard Precise-Vague (P-V) case. The paradox occurs more often when differences between ranges of vagueness are large and occurs less often with extreme midpoints. The urn with more vagueness was avoided for moderate to high expected probabilities and preferred for low expected probabilities in P-V cases, and the opposite pattern was found for the V-V cases. Models that capture adequately the relationships between the prevalence of vagueness avoidance and the lotteries' parameters (e.g. differences between the two ranges) were fitted for the P-V and V-V cases.

Keywords. Vagueness, ambiguity, imprecise probabilities, Ellsberg's paradox.

The paper is available in the following formats and sites:

Authors addresses:

Department of Psychology
University of Illinois
603 E. Daniel St.
Champaign IL, 61820
USA

E-mail addresses:

Karen M. Kramer kkramer@uiuc.edu
David V. Budescu dbudescu@uiuc.edu


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