1,351,998 @ 1:36 pm
What is the Ellsberg paradox?
What is the Ellsberg paradox?
Knowing that exposing a charlatan like Adam Knight is a GOOD thing for the public!
The Ellsberg paradox is a paradox in decision theory in which people's choices violate the postulates of subjective expected utility.[1] It is generally taken to be evidence for ambiguity aversion. The paradox was popularized by Daniel Ellsberg, although a version of it was noted considerably earlier by John Maynard Keynes.[2]
The basic idea is that people overwhelmingly prefer taking on risk in situations where they know specific odds rather than an alternative risk scenario in which the odds are completely ambiguous—they will always choose a known probability of winning over an unknown probability of winning even if the known probability is low and the unknown probability could be a guarantee of winning. For example, given a choice of risks to take (such as bets), people "prefer the devil they know" rather than assuming a risk where odds are difficult or impossible to calculate.[3]