Title

Affective Decision Making and the Ellsberg Paradox

Document Type

Discussion Paper

Publication Date

6-1-2008

CFDP Number

1667

CFDP Pages

9

Abstract

We characterize, in the framework for variational preferences, the affective decision making model of choice under risk and uncertainty introduced by Bracha and Brown (2007). This characterization (i) provides a rigorus decision-theoretic foundation for affective decision making, (ii) offers an axiomatic explanation for ambiguity-seeking in the Ellsberg Paradox and (iii) suggests a dual representation of ADM games in terms of the Legendre-Fenchel conjugate.

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