Talk:Ambiguity effect

message: Is the example given the best one of the ambiguity effect? Although the means are the same, many would prefer option X due to the shape of their utility of wealth curve.  In X, there is a certain win, but Y (although it could have double the win) has the possibility of no black balls at all.
Fullel (talk) 20:58, 29 February 2012 (UTC)
replies: text: Exactly my thoughts. Both options are equivalent in terms of expected value, but X has less variance. As presented, since both options are "worth" the same amount of $, this isn't really the best example of a cognitive bias as no "wrong" decision is being made...Jamesa7171 (talk) 08:27, 30 April 2012 (UTC)
thread_title: Untitled

message: I have a problem with the wording "the probability is unknown". That is not the case here, at least not unknown in general. It might be unknown to the person in the experiment because the probabilistic modeling of that experiment is more complex in one case than the other.  — Preceding unsigned comment added by 87.231.106.131 (talk) 07:41, 8 April 2014 (UTC)
replies: text: I agree with you that, how this passage is phrased, it's not really clear if/whether probabilities are known or unknown, and by whom. The idea is that the probability of a black ball is somewhere between 0/30 and 20/30. Although the urn "experiment" was initially conceived as more of a thought experiment, we can consider "real world" analogue by suggesting that the experiment was set up as a double blind test, where some computer program randomly chooses a number between 0 and 20, puts that many black balls in an urn, then adds '20-number picked' white balls and 10 red balls. The probability of choosing a black ball is truly unknown, though it clearly exists. 2601:19B:B00:C7B2:B90C:D072:A6C7:1128 (talk) 16:29, 15 January 2018 (UTC)
thread_title:  Probability 

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ExpertIdeas (talk) 03:08, 25 August 2015 (UTC)
thread_title:  Dr. Villeval's comment on this article 

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ExpertIdeasBot (talk) 17:05, 27 July 2016 (UTC)
thread_title:  Dr. Alevy's comment on this article 

message: When there are more variables, there is more chance that someone is being cheated. This is obvious in the mortgage example - and the possibility of someone manipulation data to get the result they expect or want in the ball example, is a possibility - that people may have in the back of their minds (subconsciously?). There should be an experiment where the balls are, as far as possible, insured to be fairly distributed. And their should be an experiment where there is an advantage to choosing the option of having the unknown distribution . . . to have it pay off with an odds benefit. It would be interesting to see how much the odds would have to be increased to change the choice and how much the choices change with increasing odds. For example, if the possibility of non-equal distribution was in play, would an a 5% advantage cause people to choose that option? There are other things that could be done too. It's kind of sad that our societies' banking scandals have made the other example so painful. 
Benvhoff (talk) 10:17, 21 August 2016 (UTC)
thread_title:  Another, more real possibility, perhaps, of why people choose options that seem safer 

message: Regarding the choice between fixed and variable mortgage rates, it does not seem clear to me that this trick is against rationality (which a heuristic is defined can be). 
Rationality in Peterson (Introduction to Decision Theory) is explained to be a concept on the normative optimality of a decision considering the information given at the point in time at which the decision was made (Peterson, 2009, p. 4).
Thus, it seems to me that the ambiguity effect (ambiguity aversion) as a decision rule (to delete outcomes for which probabilities are not known), a transformative decision rule if you will, is perfectly rational, since it does not make sense to consider the option of variable rates, since one does not know the probabilities of those variable rates. It is Knightian uncertainty which truly insufficient to be used with the (expected) utility maximisation calculus in classical economics.  — Preceding unsigned comment added by SebastianGuy (talk • contribs) 17:55, 30 June 2021 (UTC)
thread_title:  An issue with the judgement of ambiguity aversion being a cognitive bias and heuristic 

message: The probability of winning  in the game Y is given at 1/3, the same for the game X, in fact this is only true if there is at least one black and at least one white ball in the urn. 
If we consider the possibility of zero or twenty black balls( 0 to 20 instead of 1 to 19) in the urn then the probability of picking a black is 0.35.
It is counter intuitive, but without doubt.  I checked with my old faithful Microsoft Mathematics and was surprised not to find 1/3 in the first place.. The author of the article wrote about equal probability between 0 to 20 black, where 1 to 19 would have been right to have a 0.33 win probability .
It's even more uplifting at 0.35.
Another reflection : The riddle is very akin to 'would you play a game where you have 1/3 chance to win', ' would you play a game where you have 2/3 chance to lose'. Generally peoples tend to answer more positively at the first question prefering positive expectations. If you put the two propositions in the same phrase and ask for a choice... hopefuly they'll see the joke ! Not sure 100% will..
2A01:CB14:4D6:A400:3C90:160:79B6:6E7A (talk) 14:38, 5 June 2022 (UTC)
thread_title:  A small error (or ambiguity) in probability, .. and own digression..