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Ambiguity attitudes and myopic loss aversion: Experimental evidence using carnival games

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  • Aggarwal, Divya
  • Damodaran, Uday

Abstract

A series of tailor made experiments were executed on a representative Indian household sample to investigate the influence of risky and ambiguous options on the choices made by the subjects. The objective of the study was to understand the impact of prior results on subsequent decisions made along with identifying role of demographic factors impacting their choices. The experiment showed that subjects displayed an escalation of commitment while playing the game in domains of losses. The results show that attitude of ambiguity aversion cannot be generalized in totality and role of cultural factors needs to be explored further.

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  • Aggarwal, Divya & Damodaran, Uday, 2020. "Ambiguity attitudes and myopic loss aversion: Experimental evidence using carnival games," Journal of Behavioral and Experimental Finance, Elsevier, vol. 25(C).
    • Handle: RePEc:eee:beexfi:v:25:y:2020:i:c:s2214635019300747
    DOI: 10.1016/j.jbef.2019.100258
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    More about this item

    Keywords

    Ambiguity aversion; Myopic loss aversion; Status quo bias;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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