Ambiguity Models and the Machina Paradoxes

Aurelien Baillon, O l'Haridon, L Placido

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53 Citations (Scopus)


Machina (2009) introduced two examples that falsify Choquet expected utility, presently one of the most popular models of ambiguity. This article shows that Machina's examples falsify not only the model mentioned, but also four other popular models for ambiguity of the literature, namely maxmin expected utility, variational preferences, ¿-maxmin, and the smooth model of ambiguity aversion. Thus, Machina's examples pose a challenge to most of the present field of ambiguity. Finally, the paper discusses how an alternative representation of ambiguity-averse preferences works to accommodate the Machina paradoxes and what drives the results.
Original languageUndefined/Unknown
Pages (from-to)1547-1560
Number of pages14
JournalThe American Economic Review
Issue number4
Publication statusPublished - 2011

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  • EUR ESE 30

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