A Quantum Cognition Analysis of the Ellsberg Paradox

TL;DR

This paper applies quantum cognition to analyze the Ellsberg paradox, demonstrating that a dual-layer conceptual model explains violations of classical decision principles in human thought.

Contribution

It introduces a quantum cognition framework to model the Ellsberg paradox, highlighting the role of a dual-layer conceptual landscape in decision violations.

Findings

Quantum conceptual mode explains the violation of the Sure-Thing Principle.

Experimental data supports the quantum cognition model.

The conceptual landscape causes the paradoxical decision behavior.

Abstract

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.