An axiomatic approach to ε -contamination

Kiyohiko G. Nishimura, Hiroyuki Ozaki

Research output: Contribution to journalArticle

27 Citations (Scopus)

Abstract

Suppose that an economic agent is (1-\varepsilon) \times 100% certain that uncertainty she faces is characterized by a particular probability measure, but that she has a fear that, with \varepsilon \times 100% chance, her conviction is completely wrong and she is left perfectly ignorant about the true measure in the present as well as in the future. This situation is often called " varepsilon -contamination of confidence." The purpose of this paper is to provide a simple set of behavioral axioms under which the decision-maker's preference is represented by the Choquet expected utility with the varepsilon -contamination of confidence.

Original languageEnglish
Pages (from-to)333-340
Number of pages8
JournalEconomic Theory
Volume27
Issue number2
DOIs
Publication statusPublished - 2006 Feb 1

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Keywords

  • Choquet expected utility
  • Representation theorem
  • ε-contamination

ASJC Scopus subject areas

  • Economics and Econometrics

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