A Dynamic Ellsberg Urn Experiment

Two rationality arguments are used to justify the link between condi-tional and unconditional preferences in decision theory: dynamic consistencyand consequentialism. Dynamic consistency requires that ex ante contingentchoices are respected by updated preferences. Consequentialism states thatonly those outcomes which are still possible can matter for updated prefer-ences. We test the descriptive validity of these rationality arguments with adynamic version of Ellsberg's three color experiment and nd that subjectsact more often in line with consequentialism than with dynamic consistency.[...]