Economic/Social
Ellsberg Paradox
People prefer known probabilities over unknown ones
Overview
A decision theory paradox showing people avoid ambiguity even when it contradicts expected utility.
Urn with 30 red balls and 60 black or yellow balls (unknown mix). Most prefer betting on red over black (known vs unknown probability). Then most prefer betting on 'black or yellow' over 'red or yellow.' But these preferences are inconsistent with expected utility.