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A dynamic Ellsberg urn experiment

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  • Dominiak, Adam
  • Duersch, Peter
  • Lefort, Jean-Philippe

Abstract

Many theories of updating under ambiguity assume either dynamic consistency or consequentialism to underpin behaviorally the link between conditional and unconditional preferences. To test the descriptive validity of these rationality concepts, we conduct a dynamic extension of Ellsbergʼs 3-color experiment. We find that more subjects act in line with consequentialism than with dynamic consistency and that this result is even stronger among ambiguity averse subjects.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 75 (2012)
Issue (Month): 2 ()
Pages: 625-638

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Handle: RePEc:eee:gamebe:v:75:y:2012:i:2:p:625-638

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Non-expected utility preferences; Ambiguity; Updating; Dynamic consistency; Consequentialism; Experiment;

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Citations

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Cited by:
  1. Eichberger, Jürgen & Oechssler, Jörg & Schnedler, Wendelin, 2012. "How do people cope with an ambiguous situation when it becomes even more ambiguous?," Working Papers 0528, University of Heidelberg, Department of Economics.
  2. Adam Dominiak & Jean-Philippe Lefort, 2011. "Unambiguous events and dynamic Choquet preferences," Economic Theory, Springer, vol. 46(3), pages 401-425, April.
  3. Vadym Lepetyuk & Christian A. Stoltenberg, 2013. "Reconciling consumption inequality with income inequality," Working Papers 705, Federal Reserve Bank of Minneapolis.
  4. Amit Kothiyal & Vitalie Spinu & Peter Wakker, 2014. "An experimental test of prospect theory for predicting choice under ambiguity," Journal of Risk and Uncertainty, Springer, vol. 48(1), pages 1-17, February.
  5. Carvalho, M., 2012. "Static vs Dynamic Auctions with Ambiguity Averse Bidders," Discussion Paper 2012-022, Tilburg University, Center for Economic Research.
  6. Vadym Lepetyuk & Christian A. Stoltenberg, 2013. "Reconciling Consumption Inequality with Income Inequality," Tinbergen Institute Discussion Papers 13-124/VI, Tinbergen Institute.
  7. Aurélien Baillon & Han Bleichrodt & Umut Keskin & Olivier L'Haridon & Author-Name: Chen Li, 2013. "Learning under ambiguity: An experiment using initial public offerings on a stock market," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201331, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  8. Oechssler, Jörg & Roomets, Alex, 2014. "A Test of Mechanical Ambiguity," Working Papers 0555, University of Heidelberg, Department of Economics.
  9. Paul Viefers, 2012. "Should I Stay or Should I Go?: A Laboratory Analysis of Investment Opportunities under Ambiguity," Discussion Papers of DIW Berlin 1228, DIW Berlin, German Institute for Economic Research.
  10. David Cooper & David Johnson, 2013. "Ambiguity in Performance Pay: An Online Experiment," Working Papers 2013-27, Department of Economics, University of Calgary, revised 14 Nov 2013.

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