“Two Dimensions of Subjective Uncertainty,” Craig R. Fox, UCLA
BEHAVIORAL SCIENCES WORKSHOP
In my talk I will argue that people maintain dual intuitions about the nature of uncertainty, and these intuitions can have a critical impact on a wide range of judgments and choices. In some cases we attribute uncertainty to deficiencies in our knowledge, information, and/or mental model of relevant events (knowable or “epistemic” uncertainty); in other cases we attribute uncertainty to causal systems whose behavior is inherently unpredictable (random or “aleatory” uncertainty). In the first part of my talk I’ll show that people intuitively distinguish uncertainty along these two dimensions: it is reflected in their use of natural language, can be measured reliably using a simple rating scale that loads on two independent factors, and is associated with attributions of skill versus luck. In the second part of my talk I’ll demonstrate implications of the epistemic-aleatory distinction for understanding ambiguity aversion, judgmental overconfidence, and investor behaviors.
Craig Fox is Harold Williams Professor of Management and Professor of Psychology and Medicine at UCLA. He is also chair and co-founder of the Behavioral Decision Making Area of the UCLA Anderson School of Management. Dr. Fox’s research focuses primarily on behavior under risk, uncertainty, and ambiguity, using a range of empirical methods. He also applies insights from behavioral economics and social psychology to improving health and financial decisions. Professor Fox is co-President of the Behavioral Science & Policy Association, former President of the Society for Judgment and Decision Making, and a Fellow of the American Psychological Society. He received his B.A. in economics and psychology from U.C. Berkeley, and his Ph.D. in experimental psychology from Stanford University.
The Behavioral Sciences Workshop is an interdisciplinary seminar series featuring speakers of broad appeal in the behavioral sciences. The workshop is held jointly between the Yale departments of Economics, Political Science, Psychology, and the School of Management (SOM). The workshop is cosponsored by the Center for the Study of American Politics (CSAP) and the School of Management’s International Center for Finance and Whitebox Advisors fund. Lunch will be served.