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Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities

Author

Listed:
  • Grant, Simon

    (Rice U)

  • Chateauneuf, A.

    (Universite Paris I)

  • Eichberger, J.

    (Universitat Heidelberg)

Abstract
The concept of a non-extreme-outcome-additive capacity (neo-additive capacity ) is introduced. Neo-additive capacities model optimistic and pessimistic attitudes towards uncertainty as observed in many experimental studies. Moreover, neo-additive capacities can be applied easily in economic problems, as we demonstrate by examples. This paper provides an axiomatisation of Choquet expected utility with neo-capacities in a framework of purely subjective uncertainty.

Suggested Citation

  • Grant, Simon & Chateauneuf, A. & Eichberger, J., 2002. "Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities," Working Papers 2002-10, Rice University, Department of Economics.
    • Handle: RePEc:ecl:riceco:2002-10
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    References listed on IDEAS

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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