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The Ellsberg Paradox

 
EN
 
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EN
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26 January 2018 11:12
 

While listening to a news commentator compare Trump and Nixon, I remembered Daniel Ellsberg and the Pentagon Papers.  I decided to look him up to see if he was still alive (he is) and in the process, I saw a link for “The Ellsberg Paradox”.  I thought it was something about his life, so I looked at it.  Come to find out it’s a part of decision theory that Mr. Ellsberg himself popularized (he was a military analyst in his day job).  Here’s a bit of what Wiki says about it:

“The Ellsberg paradox is a paradox in decision theory in which people’s choices violate the postulates of subjective expected utility. It is generally taken to be evidence for ambiguity aversion. The paradox was popularized by Daniel Ellsberg, although a version of it was noted considerably earlier by John Maynard Keynes.

The basic idea is that people overwhelmingly prefer taking on risk in situations where they know specific odds rather than an alternative risk scenario in which the odds are completely ambiguous—they will always choose a known probability of winning over an unknown probability of winning even if the known probability is low and the unknown probability could be a guarantee of winning. That is, given a choice of risks to take (such as bets), people “prefer the devil they know” rather than assuming a risk where odds are difficult or impossible to calculate.”

Ellsberg even proposed an experiment to demonstrate it, consisting of an urn with 30 red balls and 60 balls that were black and yellow, but you didn’t know how many of each.  Then subjects would first place bets whether they would draw a red ball or a black ball. Most people would choose red, even though there were only 30 red balls, because they had no idea how many blacks there were.  Then, in a second bet, they would choose between betting on whether they would draw a red or yellow, or a black or yellow.  Since they chose red to in the first bet, it was assumed they would stick with red.  But most chose the second option, as the odds were 2/3 to some unknown odds.  Thus, the paradox. People don’t like ambiguity. 

 

[ Edited: 26 January 2018 11:18 by EN]
 
EN
 
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EN
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26 January 2018 11:19
 

“So what?” you say.  Good question.  Have you ever used this analysis in a decision?  It’s the devil you know vs. the devil you don’t. 

Anyone ever heard of the Ellsberg Paradox?

 
SkepticX
 
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SkepticX
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26 January 2018 16:15
 
EN - 26 January 2018 11:19 AM

Anyone ever heard of the Ellsberg Paradox?


Of course we have.

You just wrote a post about it ...

Duh!

 
 
hannahtoo
 
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hannahtoo
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26 January 2018 16:17
 

Sometimes at a restaurant, I’ll choose something I’ve eaten before, rather than trying something else that might be good.  Does that count?

Is this paradox related to “a bird in the hand…?”

By the way, the current movie The Post, dramatizing the revelation of the Pentagon Papers, is excellent.

 
Skipshot
 
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26 January 2018 22:13
 
EN - 26 January 2018 11:19 AM

“So what?” you say.  Good question.  Have you ever used this analysis in a decision?  It’s the devil you know vs. the devil you don’t. 

Anyone ever heard of the Ellsberg Paradox?

I have made such decisions, but they change depending on the how bad the devil I know is.  The worse the devil is the more likely I’ll take my chances with the one I don’t know.  For example, if the the devil I know is 50% good/bad I may stick with it, but if the ratio is 20/80 good/bad then I’ll take my chances with the new devil.

 
bbearren
 
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bbearren
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26 January 2018 22:21
 

I am a simple man, and a creature of habit.  The vast majority of decisions I make aren’t in that particular wheelhouse.

 
 
Cheshire Cat
 
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Cheshire Cat
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27 January 2018 11:41
 

I’m sure the Ellsberg Paradox applies in many situations, but it didn’t apply in the last presidential election. Hillary was the “devil you know,” yet enough people voted for the wild card that Trump represented that he won the electoral college and became president.

Too bad they didn’t stick with the Ellsberg Paradox.

 

 

 
 
LadyJane
 
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27 January 2018 12:08
 

The choice between the devil you know and the devil you don’t hinges on the gamble and willingness to stray from the status quo.  There’s ample evidence of this in action at this forum alone.  Through the impatient reluctance in accepting new members, and taking the time to listen to their views, while blindly supporting long term members out of familiarity over substance.  The more frequent the posting habits the more solidified the poster’s place.  Creating a territorial atmosphere that keeps outsiders at bay.  Providing very little leeway for newbies.  There is often an assumption, when eyeballs hit the handle, where opinions are formed prior to reading word one.  Agree or disagree.  Like or dislike.  Depending on your feelings toward the individual bearing the name. 

Ever written something that someone disagreed with only to witness the same person agree with the same thing when written by a different poster?  Me too.  Often.  The strange thing is that everyone is latching onto fellow patrons they don’t even know.  Inventing things about them by piecing together vague recollections of superficial tidbits that conveniently conjure fictional beings they hope to befriend.  And the contradictions are staggering.  So deciding between the devil you know and the devil you don’t is relatively moot.  When the devil you know is not who you think they are.

 
 
SkepticX
 
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27 January 2018 12:31
 
LadyJane - 27 January 2018 12:08 PM

The choice between the devil you know and the devil you don’t hinges on the gamble and willingness to stray from the status quo.  There’s ample evidence of this in action at this forum alone.  Through the impatient reluctance in accepting new members, and taking the time to listen to their views, while blindly supporting long term members out of familiarity over substance.  The more frequent the posting habits the more solidified the poster’s place.  Creating a territorial atmosphere that keeps outsiders at bay.  Providing very little leeway for newbies.  There is often an assumption, when eyeballs hit the handle, where opinions are formed prior to reading word one.  Agree or disagree.  Like or dislike.  Depending on your feelings toward the individual bearing the name.

Can’t say I haven’t noticed that as well, but still it does seem to me the Dark Side of the Interweb is significantly less dark in here.

Most of the time.

 

LadyJane - 27 January 2018 12:08 PM

Ever written something that someone disagreed with only to witness the same person agree with the same thing when written by a different poster?  Me too.  Often.

I’d like to think I haven’t done that (much), but I also realize I’m just as susceptible as any other human brain owner, to the initial reactionary perception and the natural inclination to validate it at least. The manifestations of this that come out of under-mitigated cognitive chaos certainly stand out to me at any rate. I probably miss a lot of this though, simply because I’m fairly selective about what I put my time into on the online forum outfits. A lot of what I do see is from quotes or prompted by responses by those I don’t generally ignore. I’m happy to have those referrals, but that gets me more than enough of a sense of what I think you’re on about here—not interested in more in-depth coverage, so to speak.

 

LadyJane - 27 January 2018 12:08 PM

The strange thing is that everyone is latching onto fellow patrons they don’t even know.  Inventing things about them by piecing together vague recollections of superficial tidbits that conveniently conjure fictional beings they hope to befriend.  And the contradictions are staggering.  So deciding between the devil you know and the devil you don’t is relatively moot.  When the devil you know is not who you think they are.

I’m not sure that thinking is as common as the previous, but I can’t claim to be at all confident it isn’t either. I am confident that we’re all personas in here, at least to some extent ... some far more so, and I expect some far less, than most. The interesting thing to me is whether a given persona’s driver is aware of the disparity and to what extent and in what degree of detail.

 
 
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27 January 2018 13:51
 
SkepticX - 27 January 2018 12:31 PM

I also realize I’m just as susceptible as any other human brain owner, to the initial reactionary perception and the natural inclination to validate it at least. The manifestations of this that come out of under-mitigated cognitive chaos certainly stand out to me at any rate. I probably miss a lot of this though, simply because I’m fairly selective about what I put my time into on the online forum outfits. A lot of what I do see is from quotes or prompted by responses by those I don’t generally ignore. I’m happy to have those referrals, but that gets me more than enough of a sense of what I think you’re on about here—not interested in more in-depth coverage, so to speak.

As a hypothetical (but extremely common real life every day kinda) example: it’s like when people perceive their prayers being answered by God when they lead to favourable outcomes and insist God has other plans when they don’t.  Or, when objections are made when people feel that others are speaking for them (even when they’re not) while allowing others to do it freely.  Like when all atheists are accused of speaking on behalf of all theists (even when they’re not) it places a sort of blame on the atheists for making blanket statements.  Even though the accusation itself is a blanket statement.  That presents a double standard and a catch-22.  And not always so easy to ignore, ahem, as you know.

 
 
Celal
 
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27 January 2018 14:30
 
LadyJane - 27 January 2018 12:08 PM

The choice between the devil you know and the devil you don’t hinges on the gamble and willingness to stray from the status quo.  There’s ample evidence of this in action at this forum alone.  Through the impatient reluctance in accepting new members, and taking the time to listen to their views, while blindly supporting long term members out of familiarity over substance.  The more frequent the posting habits the more solidified the poster’s place.  Creating a territorial atmosphere that keeps outsiders at bay.  Providing very little leeway for newbies.  There is often an assumption, when eyeballs hit the handle, where opinions are formed prior to reading word one.  Agree or disagree.  Like or dislike.  Depending on your feelings toward the individual bearing the name. 

Ever written something that someone disagreed with only to witness the same person agree with the same thing when written by a different poster?  Me too.  Often.  The strange thing is that everyone is latching onto fellow patrons they don’t even know.  Inventing things about them by piecing together vague recollections of superficial tidbits that conveniently conjure fictional beings they hope to befriend.  And the contradictions are staggering.  So deciding between the devil you know and the devil you don’t is relatively moot.  When the devil you know is not who you think they are.

Perceptively captured and beautifully stated.

 
EN
 
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27 January 2018 15:15
 

I cop to some of the behaviors described by LJ. At times they are brought on by simple defensiveness, or even boredom. Must. be. more. civil.

 
sojourner
 
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27 January 2018 18:39
 

Daniel Kahneman wrote about the same phenomenon with his work on behavioral finance (and in later work, I think.) It’s interesting in that while in some areas (particularly where a potential, meaningful loss is involved,) we as humans tend to make errors towards the loss aversion side; however, in other areas we are overconfident and seek novelty for the sake of novelty.


I think a preference for familiarity can be a good think if sort of meta-analyzed. Kahneman himself is a good example, to my mind. I was surprised when his name popped up in A Random Walk Down Wall Street and thought “Whoa, this dude is everywhere! I’m going to head out to my local hibachi grill and he will randomly be there throwing shrimp at people.” And I realized that my interest in reading nonfiction has really piggybacked on to the overlap in characters one encounters there. I worry it’s a bit elitist that I tend to see the same names repeatedly, but that aside, I’m probably much more interested in learning new things as I feel I ‘know’ the cast of characters involved. I have some vague outline in my mind of the people who formed the Mind and Life Institute and when they met and how their various paths overlap and the difficulties they faced on their rather idealist journey. I could say the same about the loosely knitted group around the Science of Consciousness Conference, and various other endeavors. In some ways that is putting the ‘tabloid effect’ (the tendency for our mammalian minds to assume faces and names we encounter often must have some kind of salience in our life,) to good use (learning new things).


I think the downside of rigidity is also easy to see, of course. At the recent workshop I went to, they made us switch spots at mealtimes so that everyone didn’t automatically gravitate towards the same spot. I was surprised at how much my mind rebelled against this, ha ha, like that is my spot!! Whether that is the same mechanism (a preference for familiarity) that is at play when it comes to risk aversion I don’t know, but I think either way things like this do make a strong case for meta awareness and examining our own thought processes. Reverse engineering the mind certainly seems like the “it” topic of this decade!

 
 
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27 January 2018 23:45
 

I’m an odd duck then. I’m drawn to mystery and ambiguity. When given a choice, especially a non consequential choice like a snack or a song I will almost invariably choose the thing I’m less familiar with. With gambling type scenarios I’m drawn to bets where I don’t or can’t know the odds to any significant degree. Even with important real world choices I often go out on a limb. I have something of a history with this, mind you. I’ve been repeatedly rewarded for making the unintuitive choice. I’ve chosen the lower paying job on several occasions. I’ve definitely chosen the less stable romantic interest a few times. I’ve gone on a number of crazy adventures that could have and perhaps should have turned out very badly indeed. I don’t endorse this style but it’s worked out ok so far.

I wonder… how calculated do you think goals can be or ought to be? Is the security we feel in careful planning generally justified? I really can’t say.

 
hannahtoo
 
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hannahtoo
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28 January 2018 06:35
 
Brick Bungalow - 27 January 2018 11:45 PM

I wonder… how calculated do you think goals can be or ought to be? Is the security we feel in careful planning generally justified? I really can’t say.

I think the human race benefits from having some cautious people and some risk takers.  Of course, at each end, there are people who are overly wary or else dangerously reckless.

 
LadyJane
 
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28 January 2018 06:36
 
Brick Bungalow - 27 January 2018 11:45 PM

I’m an odd duck then. I’m drawn to mystery and ambiguity. When given a choice, especially a non consequential choice like a snack or a song I will almost invariably choose the thing I’m less familiar with. With gambling type scenarios I’m drawn to bets where I don’t or can’t know the odds to any significant degree. Even with important real world choices I often go out on a limb. I have something of a history with this, mind you. I’ve been repeatedly rewarded for making the unintuitive choice. I’ve chosen the lower paying job on several occasions. I’ve definitely chosen the less stable romantic interest a few times. I’ve gone on a number of crazy adventures that could have and perhaps should have turned out very badly indeed. I don’t endorse this style but it’s worked out ok so far.

I wonder… how calculated do you think goals can be or ought to be? Is the security we feel in careful planning generally justified? I really can’t say.

I think it gets easier to trust our gut instincts as we get older.  As long as we remain grounded, that is.  This usually comes after a painstaking exercise in trial and error, of course, but micromanaging too many plans only sets us up for disappointment.  Besides, it’s hard to say how much control we have over things anyway.  Which is why I still prefer to wing it.

 
 
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