Ellsberg (1961) suggested another box in which there are 90 balls. You know that 30 of the balls are red and the other 60 are some mix of black and yellow. One ball will be randomly drawn from the box. Would you prefer to ‘bet the ball is red’ or ‘bet the ball is black’? Would you prefer to ‘bet the ball is red or yellow’ or ‘bet the ball is black or yellow’? Were your choices consistent with subjective expected utility maximization?

Answer rating: 100% (QA)

Many people prefer to Bet on red rather than bet on black Bet on black or yellow rather than red or ... View the full answer