
Ambiguity and Ambiguity Aversion
769
expectation and adjustment terms. They adopt the Complementary Independence
axiom, and also require a form of uncertainty aversion. See also Grant and Polak
(2013).
13.5.7 Variational and Multiplier Preferences
The Uncertainty Aversion Axiom of Section 13.5.1 is common to a broad class of pref-
erence models. In addition to MEU preferences, suitable parameterizations of smooth
ambiguity, Ergin-Gul, and VEU preferences also satisfy it. As we will discuss in Section
13.6, its interpretation is not entirely straightforward, or uncontroversial; on the other
hand, the fact that it is a familiar and analytically con ...