This paper introduces ambiguity into a standard litigation model to explore how plaintiffs' optimism about their probability of winning and their confidence in that estimate affect settlement outcomes and defendants' level of care. It also discusses the public policy implications in terms of monitoring the level of confidence. Key findings include that the probability of settlement increases with optimism for all plaintiffs and with confidence for pessimistic plaintiffs when they're sensitive to settlement offers. The level of care also increases in these cases. From a public policy perspective, if the government aims to minimize litigation and can only influence confidence, it should intervene to boost public confidence when plaintiffs are pessimistic about their chances of winning. In such cases, significant resources should be allocated to raise confidence.

This paper discusses models of choice under imprecise objective probabilistic information featuring beliefs about beliefs, i.e., second order beliefs. A new model, called second order dual expected utility, featuring nonadditive second order beliefs, is introduced, axiomatized, and systematically contrasted with the leading alternative model of this kind, i.e., the second order subjective expected utility model (Klibanoff et al. 2005, Nau 2006, Seo 2009) for which, for the sake of comparison, we provide a new axiomatization, dispensing with the complex constructs used in extant axiomatizations. Ambiguity attitude and attitude toward information in general are discussed and characterized.

This paper introduces ambiguity into an otherwise standard litigation model. The aim is to take into account optimism and confidence on the plaintiff side. We examine the following questions : 1) How optimism and confidence affect the outcomes of the settlement stage? 2) How optimism and confidence affect the level of care? 3) As a result what are the public policy implications in terms of monitoring the level of confidence? We show that the equilibrium probability of settlement is increasing in the degree of optimism for every plaintiffs and increasing in the level of confidence for pessimistic plaintiffs, provided the sensitivity of plaintiffs to a rise in the settlement offer is high, and that the same holds for the level of care independently of the sensitivity of plaintiffs to rises in the settlement offer. Finally, assuming the objective of the government is to minimize the probability of litigation and assuming that it can only manipulate the level of confidence, we find that a clear recommendation is possible only in the case of a high sensitivity of plaintiffs to rises in the settlement offer: government intervention to raise public confidence in the judicial system is recommended only when plaintiffs are pessimistic about their chances of winning and in that case, as much as possible should be spent.

It is very rare to find in a single person both the qualities of a remarkable scientific mind and of a wonderful human being. With this tribute to Jean-Yves Jaffray, we hope to convince the reader of his outstanding creativity and vision, of the coherence of his work, and of its relevance for some topics in decision theory that are currently under lively debate. As a scientist, Jean-Yves Jaffray can be characterized by one main insight and one main concern. His main insight is that a sound decision theory must explicitly use all the information available to the decision maker. This information about events must further be treated in a strictly objective manner. In the models he proposed as a result, objective information can be disentangled from subjective attitudes with respect to this information. For that purpose, before asking how to represent preferences, one must wonder how to treat and represent the given information. Jean-Yves’ main concern in designing his models is that they must be tractable, implementable and testable. This leads him to emphasize the simplicity of the models he puts forward, including the way the arrival of new information is modeled, and to develop experiments to test them. This adherence to objectivity together with his concern for implementable models fits well with Jean-Yves’ applied work in statistics and computer science that we will not review here. After some words on his early contributions, we will discuss the way he addressed different questions linked to Decision Theory : How to describe information (or lack of information) on events? How to model decisions in this framework? How to evaluate decisions? How to update in the presence of new

Based on experimental evidence, it is often said that one should give up the concept of preference. In this paper, we show that the validity of this inference relies on an implicit assumption, the invariance principle (IP), according to which certain features of the objects of choice are irrelevant to the decision to be made. This assumption is usually confounded with a necessary assumption of any economic model, the faithfulness assumption, (F), which states that the language of the model is rich enough to describe the diversity of empirical observations. In order to clarify the situation, we claim that one must disentangle (F) and (IP). We show that this can be done thanks to the structure of decision problem with normative equivalence (DPNE) that we introduce. We study the decision process associated to it and show that it involves the salience of attributes as the decisive element.

We axiomatize a model of decision under objective ambiguity described by multiple probability distributions. The decision maker forms a subjective (non necessarily additive) belief about the likelihood of probability distributions and computes the average expected utility of a given act with respect to this second order belief. We show that ambiguity aversion like the one revealed by the Ellsberg paradox requires that second order beliefs be nonadditive. Some properties of the model are examined.

Résumé Les anomalies expérimentales concernant la théorie des préférences sont souvent interprétées comme devant conduire à renoncer au concept de préférence. Or, nous montrons que la validité de cette inférence suppose vérifiée une hypothèse implicite – le principe d’invariance ( pi ) – selon laquelle certains aspects des objets de choix ne sont pas pertinents. Elle est habituellement confondue avec une hypothèse indispensable à la pratique de la modélisation en économie, l’hypothèse de fidélité ( hf ), qui stipule que le langage utilisé dans le modèle est suffisamment riche pour exprimer la diversité des observations empiriques. Nous montrons qu’il est nécessaire de désimbriquer ( hf ) et ( pi ), ce qui est possible grâce à l’introduction de la structure de problème de décision avec équivalence normative ( pden ). Nous étudions le processus de décision qui lui est inhérent, d’après lequel la saillance d’un attribut est cruciale pour la prise de décision.