Affective Decision Making and the Ellsberg Paradox
Donald J. Brown
Ellsberg paradox, Schmeidler's axiom, Affective decision making, Variational preferences, Legendre-Fenchel conjugate | Affective choice, Endogenous risk perception, Insurance, Ellsberg paradox, Variational preferences, Ambiguity-seeking
Affective decision-making is a strategic model of choice under risk and uncertainty where we posit two cognitive processes -- the "rational" and the "emotional" process. Observed choice is the result of equilibrium in this intrapersonal game. As an example, we present a...