Ambiguity and ambiguity attitude

Ambiguity refers to scenarios where probabilities are not known nor objectively specified as opposed to scenarios of risk where probability are objectively available. Scenarios with ambiguity are widespread in economics. Based on early thought experiments, subsequent literature has found that many individuals choices are different under ambiguity from those implied by the standard subjective expected utility model. This has led to significant extensions and advances in models of decision-making. In turn these models have been useful to accommodate a rich pattern of choices and to help understand a wide range of economic phenomena.