Affective Decision Making and the Ellsberg Paradox
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.
Bracha, Anat and Brown, Donald J., "Affective Decision Making and the Ellsberg Paradox" (2008). Cowles Foundation Discussion Papers. 1974.