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More Ambiguous or More Complex? An Investigation of Individual Preferences under Model Uncertainty

Author

Listed:
  • Ilke AYDOGAN

    (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France; and iRisk Research Center on Risk and Uncertainty)

  • Loïc BERGER

    (CNRS, Univ. Lille, IESEG School of Management, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France; iRisk Research Center on Risk and Uncertainty; RFF-CMCC European Institute on Economics and the Environment (EIEE), and Centro Euro-Mediterraneo sui Cambiamenti Climatici, Italy)

  • Vincent THEROUDE

    (Université de Lorraine, Université de Strasbourg, CNRS, BETA, 54000, Nancy, France)

Abstract
WeThis paper explores the drivers of individual preferences under uncertainty. We propose a characterization of the situations of model uncertainty such as the ones introduced by Ellsberg (1961) by building on the more ambiguous relations of Jewitt and Mukerji (2017) and Izhakian (2020) and on two new more complex relations. Re- considering existing data sets from the recent literature and combining them with new experimental evidence, we show that uncertainty preferences can be driven by considerations regarding both the degree of complexity and ambiguity that a situation entails.

Suggested Citation

  • Ilke AYDOGAN & Loïc BERGER & Vincent THEROUDE, 2023. "More Ambiguous or More Complex? An Investigation of Individual Preferences under Model Uncertainty," Working Papers 2023-iRisk-02, IESEG School of Management.
    • Handle: RePEc:ies:wpaper:e202303
    as

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    File URL: https://www.ieseg.fr/wp-content/uploads/2023/03/2023-iRisk-02.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    : Ambiguity; model uncertainty; complexity; Ellsberg paradox;
    All these keywords.

    JEL classification:

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

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