A quantum cognition analysis of the Ellsberg paradox

The expected utility hypothesis is one of the foundations of classical approaches to economics and decision theory and Savage's Sure- Thing Principle is a fundamental element of it. It has been put forward that real-life situations exist, illustrated by the Allais and Ellsberg paradoxes, in which the Sure-Thing Principle is violated, and where also the expected utility hypothesis does not hold. We have recently presented strong arguments for the presence of a double layer structure, a classical logical and a quantum conceptual, in human thought and that the quantum conceptual mode is responsible of the above violation. We consider in this paper the Ellsberg paradox, perform an experiment with real test subjects on the situation considered by Ellsberg, and use the collected data to elaborate a model for the conceptual landscape surrounding the decision situation of the paradox. We show that it is the conceptual landscape which gives rise to a violation of the Sure-Thing Principle and leads to the paradoxical situation discovered by Ellsberg.

Publication year:2011

Keywords:Sure-Thing Principle, Ellsberg paradox, Conceptual landscape, Quantum cognition