Topic:Partial Ambiguity

Speaker:CHEW SOO HONG/Professor, National University of Singapore

Location: EMS B127

Time: 10:00-11:30 /10 Sept., 2015

Abstract:

The essence of the situation is action according to opinion, of greater or less foundation and value, neither entire ignorance nor complete and perfect information, but partial knowledge.

-- Frank H. Knight (1921, p.199)

If two probabilities are equal in degree, ought we, in choosing our course of action, to prefer that one which is based on a greater body of knowledge?

-- John M. Keynes (1921, p.357)

Beyond pure risk and full ambiguity, we study experimentally attitude towards three forms of partial ambiguity. Interval ambiguity involves a symmetric range of possible compositions of red and black cards in a deck of 100 cards. Complementarily, disjoint ambiguity comprises two disjoint intervals of possible compositions. Two-point ambiguity involves either n or 100-n cards red with the rest black. Subjects exhibit a tight association between attitudes toward partial ambiguity and compound risk and are averse to increasing the number of possibilities in interval and disjoint ambiguity and compound risk. For two-point ambiguity and compound risk, subjects exhibit non-neutrality between subjective and objective stage-one priors. Our findings have rich implications on models of ambiguity and compound risk in the literature.

CV : http://www.fas.nus.edu.sg/ecs/people/profile/ecscsh.html