I many circumstances, evaluations are based on empirical data. However, some observations may be imprecise, meaning that it is not entirely clear what occurred in them. We address the question of how beliefs are formed in these situations. The individual in our model is essentially a “frequentist.” He first makes a subjective judgment about the occurrence of the event for each imprecise observa...

Most insurance companies publish few data on the occurrence and detection of insurance fraud. This stands in contrast to the previous literature on costly state verification, which has shown that it is optimal to commit to an auditing strategy, as the credible announcement of thoroughly auditing claim reports might act as a powerful deterrent. We show that uncertainty about fraud detection can ...

A Working Paper is the author's intellectual property. It is intended as a means to promote research to interested readers. Its content should not be copied or hosted on any server without written permission from publications. We model a common pool resource game under environmental uncertainty. A symmetric group of individuals face the dilemma of sharing a common resource: each player chooses ...

Let W (ψ; x, y) be the wideband ambiguity function. It is obtained in this note that y− α+2 2 W (ψ;x, y)(α > −1) is SO(2)-invariant if and only if the Fourier transform of ψ is a Laguerre function.

We provide a rationale for ambiguous communication. We do so by considering a cheap talk game in which a (possibly ambiguity averse) sender (S) able to randomize according to unknown probabilities faces an ambiguity averse receiver (R). We show that under fairly general circumstances, there exist equilibria featuring Ellsbergian communication strategies that allow both S and R to obtain a highe...

The Working Papers should not be reported as representing the views of the Banco Central do Brasil. The views expressed in the papers are those of the author(s) and do not necessarily reflect those of the Banco Central do Brasil. This paper characterizes ambiguity averse preferences in the absence of the completeness axiom. We axiomatize multiple selves versions of some of the most important ex...

We show that an increase in uncertainty about the probability of being audited (ambiguity) increases tax compliance for ambiguity-averse taxpayers but reduces compliance for ambiguity lovers. Because experimental evidence reveals considerable heterogeneity with respect to ambiguity preferences, we conclude that fostering uncertainty about the probability of being audited may not be an effective...