Quantum Structures in Human Decision-making: Towards Quantum Expected Utility
This work addresses decision-making puzzles for researchers in economics and psychology, but it is incremental as it builds on an existing quantum framework.
The paper tackles the Ellsberg paradox and challenges to subjective expected utility theory by applying a quantum-theoretic framework to explain decision-making under uncertainty, showing it can model empirical data from human participants and real-life financial and medical decisions.
{\it Ellsberg thought experiments} and empirical confirmation of Ellsberg preferences pose serious challenges to {\it subjective expected utility theory} (SEUT). We have recently elaborated a quantum-theoretic framework for human decisions under uncertainty which satisfactorily copes with the Ellsberg paradox and other puzzles of SEUT. We apply here the quantum-theoretic framework to the {\it Ellsberg two-urn example}, showing that the paradox can be explained by assuming a state change of the conceptual entity that is the object of the decision ({\it decision-making}, or {\it DM}, {\it entity}) and representing subjective probabilities by quantum probabilities. We also model the empirical data we collected in a DM test on human participants within the theoretic framework above. The obtained results are relevant, as they provide a line to model real life, e.g., financial and medical, decisions that show the same empirical patterns as the two-urn experiment.