Information Source's Reliability

SummaryThis paper studies the impact of unreliable information sources on the decision process under ambiguity. Using a modified Ellsberg framework, it compares two types of agents: one is a Savage expected utility maximizer and the other a Neo-Choquet-type expected utility maximizer. This comparison shows that while the former will always conform to the source of information regardless of its level of reliability, the latter will make its choice based on its levels of preference/aversion for ambiguity and its degree of optimism/pessimism. Therefore, this explains why decision-makers may choose randomly when the reliability of the information source is too low