Abstract: A popular framework for ambiguity represents alternatives of choice as two-stage gambles reflecting the uncertainty about the true probability on the state space. In this framework, ambiguity-averse behaviour could be driven by differences in utilities between stages—as in the smooth ambiguity model (Klibanoff et al., 2005)—or by non-linear probability weighting—as in a line of research initiated by Segal (1987). The present paper investigates the relevance of these distinct drivers of ambiguity attitudes in a two-stage setup by estimating a generalization of the smooth ambiguity model incorporating probability weighting. Our experiment reveals the relevance of both factors to describing ambiguity attitudes. We also report evidence of stakes-dependence of ambiguity attitudes, as implied by utility-driven approaches.
Abstract: A popular framework for ambiguity represents alternatives of choice as two-stage gambles reflecting the uncertainty about the true probability on the state space. In this framework, ambiguity-averse behaviour could be driven by differences in utilities between stages—as in the smooth ambiguity model (Klibanoff et al., 2005)—or by non-linear probability weighting—as in a line of research initiated by Segal (1987). The present paper investigates the relevance of these distinct drivers of ambiguity attitudes in a two-stage setup by estimating a generalization of the smooth ambiguity model incorporating probability weighting. Our experiment reveals the relevance of both factors to describing ambiguity attitudes. We also report evidence of stakes-dependence of ambiguity attitudes, as implied by utility-driven approaches.
Abstract: Is there a fundamental gain-loss asymmetry in information preferences? Using two-stage lotteries with varying dates of resolution and a fixed future date of payment, we ask subjects when they want to know the outcome: earlier, gradually, or later. When facing gains, information seeking predominates, becoming stronger at higher likelihoods. However, in the domain of losses, we find indifference between gradual and late resolution. Moreover, higher the probability of losing, weaker is the demand for information. Remarkably, a sizeable minority are willing to pay for ignorance of bad news, a novel and explicit demonstration of information avoidance that is referred to as the ostrich effect. Our findings are inconsistent with established models in economics that cannot accommodate domain dependence of information preferences. They also reveal the importance of emotions in driving attitudes towards information.
Abstract: Is there a fundamental gain-loss asymmetry in information preferences? Using two-stage lotteries with varying dates of resolution and a fixed future date of payment, we ask subjects when they want to know the outcome: earlier, gradually, or later. When facing gains, information seeking predominates, becoming stronger at higher likelihoods. However, in the domain of losses, we find indifference between gradual and late resolution. Moreover, higher the probability of losing, weaker is the demand for information. Remarkably, a sizeable minority are willing to pay for ignorance of bad news, a novel and explicit demonstration of information avoidance that is referred to as the ostrich effect. Our findings are inconsistent with established models in economics that cannot accommodate domain dependence of information preferences. They also reveal the importance of emotions in driving attitudes towards information.
Attitudes towards Probability Information
Attitudes towards Probability Information
Abstract: Attitudes towards uncertainty have been the subject of numerous theoretical and experimental inquiries. Independently, an emerging literature has sought to understand preferences towards non-instrumental information, mainly in the context of objective uncertainty (risk). Our experimental study has a two-fold objective: to extend the study of such information preferences to subjective uncertainty (ambiguity), and, to conduct a joint investigation of attitudes towards information and uncertainty.
Abstract: Attitudes towards uncertainty have been the subject of numerous theoretical and experimental inquiries. Independently, an emerging literature has sought to understand preferences towards non-instrumental information, mainly in the context of objective uncertainty (risk). Our experimental study has a two-fold objective: to extend the study of such information preferences to subjective uncertainty (ambiguity), and, to conduct a joint investigation of attitudes towards information and uncertainty.
Decision Prediction from Limited Data: Classical vs Bayesian Approaches
Decision Prediction from Limited Data: Classical vs Bayesian Approaches
Behavioral Drivers of Social Entrepreneurship
Behavioral Drivers of Social Entrepreneurship