How do people cope with an ambiguous situation when it becomes even more ambiguous?

Arbeitspapier

As illustrated by the famous Ellsberg paradox, many subjects prefer to bet on events with known rather than with unknown probabilities, i.e., they are ambiguity averse. In an experiment, we examine subjects’ choices when there is an additional source of ambiguity, namely, when they do not know how much money they can win. Using a standard independence assumption, we show that ambiguity averse subjects should continue to strictly prefer the urn with known probabilities. In contrast, our results show that many subjects no longer exhibit such a strict preference. This should have important ramifications for modeling ambiguity aversion.

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• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Discussion Paper Series ; No. 528

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Design of Experiments: Laboratory, Individual
• Thema: ambiguity aversion ; uncertainty ; minmax-expected utility ; Risikoaversion ; Entscheidung unter Unsicherheit ; Erwartungsnutzen ; Test

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Eichberger, Jürgen ; Oechssler, Jörg ; Schnedler, Wendelin
• Ereignis: Veröffentlichung
• (wer): University of Heidelberg, Department of Economics
• (wo): Heidelberg
• (wann): 2012

Weitere Informationen

• DOI: doi:10.11588/heidok.00013439
• Handle: http://hdl.handle.net/10419/127342
• URN: urn:nbn:de:bsz:16-opus-134394