Updating ambiguity averse preferences

2007), and multiple priors (Gilboa and Schmeidler 1989; Ghirardato et al. The natural updating theory of SEU preferences Siniscalchi (2009) refers to is Savage’s axiom P2, bestknown as the “sure thing principle”.

Rather, it results from MLU's selection of extreme priors, causing a violation of the stability of set inclusion over the course of the updating process.We use cookies to make interactions with our website easy and meaningful, to better understand the use of our services, and to tailor advertising.For further information, including about cookie settings, please read our Cookie Policy .The identified switch in betting preferences is not due to a violation of dynamic consistency or consequentialism. Rather, it results from MLU’s selection of extreme priors, causing a violation of the stability of set inclusion over the course of the updating process.

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Its main contribution is to design and analyse a simple example to demonstrate that MLU suffers from unintuitive characteristics.

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