A Two-Ball Ellsberg Paradox

Arbeitspapier

We conduct an incentivized experiment on a nationally representative US sample (N=708) to test whether people prefer to avoid ambiguity even when it means choosing dominated options. In contrast to the literature, we find that 55% of subjects prefer a risky act to an ambiguous act that always provides a larger probability of winning. Our experimental design shows that such a preference is not mainly due to a lack of understanding. We conclude that subjects avoid ambiguity per se rather than avoiding ambiguity because it may yield a worse outcome. Such behavior cannot be reconciled with existing models of ambiguity aversion in a straightforward manner.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10745

Classification and Topics

• Classification: Wirtschaft
• Subject: uncertainty ; complexity ; ambiguity ; decision-making

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jabarian, Brian ; Lazarus, Simon
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282433
• Last update: 10.03.2025, 11:41 AM CET