Wednesday, September 19, 2007

the ellsberg paradox

there is a piece in the ny times earlier this week that blames jane fonda, only slightly tongue-in-cheek, for global warming. it suggests that her 1979 film 'the china syndrome' created an anti nuclear power panic.

"The nuclear industry, already foundering as a result of economic, regulatory and public pressures, halted plans for further expansion. And so, instead of becoming a nation with clean and cheap nuclear energy, as once seemed inevitable, the United States kept building power plants that burned coal and other fossil fuels. "
(the rest is here)

jane fonda has always been an easy target. not interested. my eye was caught, however, by these other sentences in the article:

"How do people weigh risk versus uncertainty? Consider a famous experiment that illustrates what is known as the Ellsberg Paradox. There are two urns. The first urn, you are told, contains 50 red balls and 50 black balls. The second one also contains 100 red and black balls, but the number of each color is unknown. If your task is to pick a red ball out of either urn, which urn do you choose? Most people pick the first urn, which suggests that they prefer a measurable risk to an immeasurable uncertainty. (This condition is known to economists as ambiguity aversion.)"

i've not heard of this before, and found it fascinating. my response, however, was very run-of-the-mill since, unless i happened to be in an odd mood, i would surely pick from the first urn. how about you?

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