Decision in ambiguity: models and experimental evaluations.

Summary Over the last thirty years, the traditional approach to choice under uncertainty, expected utility theory with subjective probabilities, has been widely criticized and discussed. One of the fundamental criticisms lies in the inability of the traditional approach to take into account the attitude towards ambiguity in individual choices. In order to overcome these deficiencies, many theoretical alternatives to expected utility under uncertainty have ́et ́e proposed. These decision models under ambiguity thus provide various representations of the limited confidence that an economic agent may have in her beliefs. In this paper, we provide an overview of this literature, its theoretical contributions and the experimental evaluations performed to judge the empirical relevance of the described models. We show that, as they stand, ambiguity models are characterized by their diversity and, although no consensus has yet emerged, their major strength comes from the role they give to beliefs in economic analysis.