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A randomness device to create the conditions of uncertainty

Author

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  • Loïc Berger

    (CNRS - Centre National de la Recherche Scientifique, IÉSEG School Of Management [Puteaux], EIEE - European Institute on Economics and the Environment, CMCC - Centro Euro-Mediterraneo per i Cambiamenti Climatici [Bologna])

Abstract

The experimental study of decision-making under uncertainty typically builds on Ellsberg-type settings. Yet, as the total number of balls is known in standard Ellsberg's urns, an implicit constraint is put on the specification of the probability models to consider. In practice, this restricts the ability of Ellsberg's urns to characterize situations going beyond those of model ambiguity. In this note, I present a simple and easy-to-implement device that creates the initial conditions of uncertainty, which constitute a critical prerequisite for the study of model misspecification.

Suggested Citation

  • Loïc Berger, 2023. "A randomness device to create the conditions of uncertainty," Post-Print hal-04125691, HAL.
    • Handle: RePEc:hal:journl:hal-04125691
    DOI: 10.1080/13504851.2023.2208820
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    References listed on IDEAS

    as
    1. Hansen, Lars Peter, 2013. "Uncertainty Outside and Inside Economic Models," Nobel Prize in Economics documents 2013-7, Nobel Prize Committee.
    2. Ilke Aydogan & Loïc Berger & Valentina Bosetti & Ning Liu, 2023. "Three Layers of Uncertainty," Journal of the European Economic Association, European Economic Association, vol. 21(5), pages 2209-2236.
    3. Lars Peter Hansen, 2014. "Nobel Lecture: Uncertainty Outside and Inside Economic Models," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 945-987.
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