New model challenges expected utility theory, revolutionizes trade decisions
The article explores how people make decisions in auctions when they don't know the exact values of what they're bidding on. Traditional theories suggest that without full information, no trade should happen. However, the researchers found that in a different model of decision-making, trade can still occur because not bidding is a weak strategy. They tested these ideas in a lab experiment and found strong evidence supporting this new way of thinking about decision-making in uncertain situations.