Ambiguity aversion

From Wikipedia, the free encyclopedia

Ambiguity aversion (also known as uncertainty aversion) describes an attitude of preference for known risks over unknown risks. It is demonstrated in the Ellsberg paradox. Note that it is not the same as risk aversion, since it is a rejection of types of risk based in part on measures of their certainty, not solely on their magnitude.

[edit] See also

• Precautionary principle
• Uncertainty

[edit] References

• "Subjective Probability and Expected Utility without Additivity", David Schmeidler, Econometrica, Vol. 57, No. 3. (May, 1989), pp. 571-587.
• "A Definition of Uncertainty Aversion", Larry G. Epstein, The Review of Economic Studies, Volume 66 (July 1999), p. 579.

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