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The Ellsberg paradox: A challenge to quantum decision theory?

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  • Ali al-Nowaihi
  • Sanjit Dhami

Abstract

We set up a simple quantum decision model of the Ellsberg paradox. We find that the matching probabilities that our model predict are in good agreement with those empirically measured by Dimmock et al. (2015). Our derivation is parameter free. It only depends on quantum probability theory in conjunction with the heuristic of insufficient reason. We suggest that much of what is normally attributed to probability weighting might actually be due to quantum probability.

Suggested Citation

  • Ali al-Nowaihi & Sanjit Dhami, 2016. "The Ellsberg paradox: A challenge to quantum decision theory?," Discussion Papers in Economics 16/08, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:16/08
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp16-08.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mengxing Wei & Ali al-Nowaihi & Sanjit Dhami, 2017. "Can quantum decision theory explain the Ellsberg paradox?," Discussion Papers in Economics 17/07, Division of Economics, School of Business, University of Leicester.
    2. Ali al-Nowaihi & Sanjit Dhami & Mengxing Wei, 2018. "Quantum Decision Theory and the Ellsberg Paradox," CESifo Working Paper Series 7158, CESifo.

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    More about this item

    Keywords

    Quantum probability; Ellsberg paradox; probability weighting; matching probabilities; projective expected utility; projective prospect theory;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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