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Decision Making Under Ambiguity: A Belief-function Perspective
Srivastava, Rajendra P.
Srivastava, Rajendra P.
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Abstract
In this article, we discuss problems with probability theory in representing uncertainties
encountered in the "real world" and show how belief functions can overcome these difficulties.
Also, we discuss an expected utility approach of decision making under ambiguity using the
belief function framework. In particular, we develop a proposition for decision making under
ambiguity using the expected utility theory. This proposition is based on Strat's approach of
resolving ambiguity in the problem using belief functions. We use the proposition to explain
the Ellsberg paradox and model the decision making behavior under ambiguity. We use the empirical
data of Einhorn and Hogarth to validate the proposition. Also, we use the proposition to
predict several decision making behaviors under ambiguity for special conditions. Furthermore,
we discuss the general condition under which the "switching" behavior, as observed by Einhorn
and Hogarth, will occur using the concept of "precision measure" in the expected utility theory.
Description
This is the publisher's version, which is being shared with permission, and which is also available electronically from: http://acs.polsl.pl/
Date
1997
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De Gruyter Open
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Citation
R.P. Srivastava: Decision making under ambiguity: a belief-function perspective. Archives of Control Sciences, 6(XLII), 1997, 5-27.