Increasing uncertainty: a definition

✍ Scribed by Simon Grant; John Quiggin

• Book ID: 104045681
• Publisher: Elsevier Science
• Year: 2005
• Tongue: English
• Weight: 236 KB
• Volume: 49
• Category: Article
• ISSN: 0165-4896
• DOI: 10.1016/j.mathsocsci.2004.08.005

✦ Synopsis

We present a definition of increasing uncertainty, in which an elementary increase in the uncertainty of any act corresponds to the addition of an delementary betT that increases consumption by a fixed amount in (relatively) dgoodT states and decreases consumption by a fixed (and possibly different) amount in (relatively) dbadT states. This definition naturally gives rise to a dual definition of comparative aversion to uncertainty. We characterize this definition for a popular class of generalized models of choice under uncertainty.