Ells­berg para­dox

The Hindu - - OPED -

This refers to the ten­dency to choose to deal with risky sce­nar­ios where peo­ple know the prob­a­bil­ity of the var­i­ous pos­si­ble out­comes as against al­ter­na­tive sce­nar­ios where they do not know the prob­a­ble out­comes. This oc­curs even when the chances of win­ning are higher in the sce­nario where the prob­a­bil­i­ties are un­known. This is used to ex­plain why peo­ple try to avoid sit­u­a­tions that in­volve any de­gree of un­cer­tainty re­gard­ing the out­come and in­stead pre­fer sta­bil­ity. It is named af­ter Amer­i­can whistle­blower Daniel Ells­berg who pro­posed it in his pa­per “Risk, am­bi­gu­ity and the sav­age ax­ioms”.

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