From ambiguity aversion to a generalized expected utility. Modeling preferences in a quantum probabilistic framework
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Abstract: Ambiguity and ambiguity aversion have been widely studied in decision theory and economics both at a theoretical and an experimental level. After Ellsberg's seminal studies challenging subjective expected utility theory (SEUT), several (mainly normative) approaches have been put forward to reproduce ambiguity aversion and Ellsberg-type preferences. However, Machina and other authors have pointed out some fundamental difficulties of these generalizations of SEUT to cope with some variants of Ellsberg's thought experiments, which has recently been experimentally confirmed. Starting from our quantum modeling approach to human cognition, we develop here a general probabilistic framework to model human decisions under uncertainty. We show that our quantum theoretical model faithfully represents different sets of data collected on both the Ellsberg and the Machina paradox situations, and is flexible enough to describe different subjective attitudes with respect to ambiguity. Our approach opens the way toward a quantum-based generalization of expected utility theory (QEUT), where subjective probabilities depend on the state of the conceptual entity at play and its interaction with the decision-maker, while preferences between acts are determined by the maximization of this 'state-dependent expected utility'.
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Cited in
(16)- A quantum-probabilistic paradigm: non-consequential reasoning and state dependence in investment choice
- Quantum-like model of subjective expected utility
- Testing ambiguity and Machina preferences within a quantum-theoretic framework for decision-making
- Quantum structure in economics: the Ellsberg paradox
- Experiment-dependent priors in psychology and physics
- A Quantum Probability Model for the Constructive Influence of Affective Evaluation
- Quantum structures in human decision-making: towards quantum expected utility
- Type indeterminacy: A model of the KT(Kahneman-Tversky)-man
- Dynamic consistency of expected utility under non-classical (quantum) uncertainty
- Representing attitudes towards ambiguity in Hilbert space: foundations and applications
- Modeling human decision-making: an overview of the Brussels quantum approach
- A proposal to extend expected utility in a quantum probabilistic framework
- A quantum-like model of selection behavior
- The Ellsberg paradox: a challenge to quantum decision theory?
- Identifying quantum structures in the Ellsberg paradox
- Explaining versus describing human decisions: Hilbert space structures in decision theory
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