Unreliable probabilities, risk taking, and decision making

Gärdenfors, Peter; Sahlin, Nils‐Eric

doi:10.1017/cbo9780511609220.020

Cited by 120 publications

(97 citation statements)

References 25 publications

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“…Ceteris paribus, individual perception of uncertainty will decrease the more knowledge an individual has about the process that generates outcome probabilities . The same process holds for Gardenfors and Sahlin [1982]: vague or unknown probabilities can be perceived as a set of reliable probability measures of which some might be more reliable than others. Information over the distribution is due to have a direct impact on the reliability of the probability measures that individuals include in their choice set.…”

Section: The Impact Of Probability Information On Wtp For Insurance Umentioning

confidence: 95%

“…On the other hand, the models by Segal [1987] and Gardenfors and Sahlin [1982] do not explicitly allow for a switch in ambiguity attitudes according to the probability level. These models generally predict ambiguity aversion, i.e.…”

Section: Wtp To Insure Under Ambiguity Versus Wtp Under Riskmentioning

confidence: 99%

“…According to the models by Einhorn and Hogarth [1985], Ellsberg [1961], and Gardenfors and Sahlin [1982], uncertainty is identified with the presence of more than one probability distribution or by more than one probability measure for each of the possible events.…”

Section: The Impact Of Probability Information On Wtp For Insurance Umentioning

confidence: 99%

“…Hogarth and Kunreuther [1989], for instance, use a the "Best Estimate" representation of uncertainty (subjects are provided with a probability measure and they are told that this measure is the "best estimate" available), and a probability interval (subjects know that every probability measure inside a given range is equally likely). 7 Gardenfors and Sahlin [1982] and Sarin and Weber [1993] use an ambiguity scenario involving a set of four probability measures. These three representations of ambiguity can be mapped into as many theoretical models.…”

Section: The Effect Of Alternative Probability Distributions On the Vmentioning

confidence: 99%

See 3 more Smart Citations

The Valuation of Insurance under Uncertainty: Does Information about Probability Matter?

Mauro¹,

Maffioletti²

2001

Geneva Risk Ins Rev

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In a laboratory experiment we test the hypothesis that consumers' valuation of insurance is sensitive to the amount of information available on the probability of a potential loss. In order to test this hypothesis we simulate a market in which we elicit individuals' willingness to pay to insure against a loss characterised either by known or else vague probabilities. We use two distinct treatments by providing subjects with different information over the vague probabilities of loss. In general we find that uncertainty about probabilities has a weak impact on consumers' valuation of insurance. However, additional information about probabilities tends to marginally increase the price individuals are willing to pay to insure themselves. Implications for the insurance market are derived.

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Section: The Impact Of Probability Information On Wtp For Insurance Umentioning

confidence: 95%

Section: Wtp To Insure Under Ambiguity Versus Wtp Under Riskmentioning

confidence: 99%

Section: The Impact Of Probability Information On Wtp For Insurance Umentioning

confidence: 99%

Section: The Effect Of Alternative Probability Distributions On the Vmentioning

confidence: 99%

See 2 more Smart Citations

The Valuation of Insurance under Uncertainty: Does Information about Probability Matter?

Mauro¹,

Maffioletti²

2001

Geneva Risk Ins Rev

View full text Add to dashboard Cite

show abstract

“…An immediate consequence of the assumption of preclSlon is outlined by the following example, due to Gardenfors and Sahlin (1982). Consider Miss Julie who is invited to bet on the outcome of two different tennis matches.…”

Section: Imprecise Probabilitiesmentioning

confidence: 99%