[1] Daniel Ellsberg popularized the paradox in his 1961 paper, "Risk, Ambiguity, and the Savage Axioms".
A decision-maker will overwhelmingly favor a choice with a transparent likelihood of risk, even in instances where the unknown alternative will likely produce greater utility.
The participants then choose a gambling scenario: Additionally, the participant may choose a separate gamble scenario within the same situational parameters: The experimental conditions manufactured by Ellsberg serve to rely upon two economic principles: Knightian uncertainty, the unquantifiable nature of the mix between both yellow and black balls within the single urn, and probability, of which red balls are drawn at 1/3 vs. 2/3.
That is, these alternative approaches sometimes suppose that the agent formulates a subjective (though not necessarily Bayesian) probability for possible outcomes.
In light of the ambiguity in the probabilities of the outcomes, the agent is unable to evaluate a precise expected utility.
The agent then tries to satisfice the expected utility and maximize the robustness against uncertainty in the imprecise probabilities.
This robust-satisficing approach can be developed explicitly to show that the choices of decision-makers should display precisely the preference reversal that Ellsberg observed.
Many humans naturally assume in real-world situations that if they are not told the probability of a certain event, it is to deceive them.
Participants make the same decisions in the experiment as they would about related but not identical real-life problems where the experimenter would be likely to be a deceiver acting against the subject's interests.
When making the decision, it is quite possible that people simply neglect to consider that the experimenter does not have a chance to modify the contents of the urn in between the draws.
[7] To describe how an individual would take decisions in a world where uncertainty aversion exists, modifications of the expected utility framework have been proposed.
[10] Ellsberg left his graduate studies to join the RAND Corporation as a strategic analyst but continued to do academic work on the side.
The work was made public in 2001, some 40 years after being published, because of the Pentagon Papers scandal then encircling Ellsberg's life.