A dynamic Ellsberg urn experiment

Many theories of updating under ambiguity assume either dynamic consistency or consequentialism to underpin behaviorally the link between conditional and unconditional preferences. To test the descriptive validity of these rationality concepts, we conduct a dynamic extension of Ellsbergʼs 3-color ex...

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Bibliographic Details
Published inGames and economic behavior Vol. 75; no. 2; pp. 625 - 638
Main Authors Dominiak, Adam, Duersch, Peter, Lefort, Jean-Philippe
Format Journal Article
LanguageEnglish
Published Duluth Elsevier Inc 01.07.2012
Academic Press
Subjects
Ambiguity
Behavioural economics
Consequentialism
Dynamic consistency
Dynamics
Economic models
Ellsberg, Daniel
Experiment
Experiments
Game theory
Non-expected utility preferences
Preferences
Rationality
Studies
Updating
Utility theory
Dynamic consistency
Experiment
Non-expected utility preferences
Updating
C91
D81
Consequentialism
Ambiguity
Online AccessGet full text
ISSN0899-8256
1090-2473
DOI10.1016/j.geb.2012.01.002

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Summary:Many theories of updating under ambiguity assume either dynamic consistency or consequentialism to underpin behaviorally the link between conditional and unconditional preferences. To test the descriptive validity of these rationality concepts, we conduct a dynamic extension of Ellsbergʼs 3-color experiment. We find that more subjects act in line with consequentialism than with dynamic consistency and that this result is even stronger among ambiguity averse subjects. ► We experimentally test consequentialism versus dynamic consistency. ► The design is a dynamic extension of the 3-color Ellsberg urn. ► More subjects violate dynamic consistency than consequentialism. ► Violating subjects (for both axioms) are less confident in their responses.
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ISSN:0899-8256
1090-2473
DOI:10.1016/j.geb.2012.01.002