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Ambiguity attitudes and social interactions: An experimental investigation

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  • Gary Charness

    ()

  • Edi Karni
  • Dan Levin

Abstract

This paper reports the results of experiments testing prevalence of non-neutral ambiguity attitudes and how these attitudes change as a result of interpersonal interactions. To address the first question we conducted experiments involving individual choice between betting on ambiguous and unambiguous events of the subject’s choice. We found that a large majority of subjects display ambiguity neutral attitudes, many others display ambiguity incoherent attitudes, and few subjects display either ambiguity-averse attitudes or ambiguity-seeking attitudes. To address the second question we designed a new experiment with a built-in incentive to persuade. We found that interpersonal interactions without incentives to persuade have no effect on behavior. However, when incentives were introduced, the ambiguity neutral subjects were better able to persuade ambiguity seeking and ambiguity incoherent subjects to adopt ambiguity neutral choice behavior and, to a lesser extent, also ambiguity averse subjects. Copyright Springer Science+Business Media New York 2013

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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 46 (2013)
Issue (Month): 1 (February)
Pages: 1-25

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Handle: RePEc:kap:jrisku:v:46:y:2013:i:1:p:1-25

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Web page: http://www.springerlink.com/link.asp?id=100299

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Keywords: Ambiguity aversion; Ambiguity attitudes; Ellsberg paradox; D81; C91; C92;

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  1. Akay, Alpaslan & Martinsson, Peter & Medhin, Haileselassie & Trautmann, Stefan, 2010. "Attitudes Toward Uncertainty Among the Poor: Evidence from Rural Ethiopia," Discussion Papers dp-10-04-efd, Resources For the Future.
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Cited by:
  1. repec:clg:wpaper:2013-27 is not listed on IDEAS
  2. Oechssler, Jörg & Roomets, Alex, 2014. "A Test of Mechanical Ambiguity," Working Papers 0555, University of Heidelberg, Department of Economics.
  3. Spiros Bougheas & Jeroen Nieboer & Martin Sefton, 2013. "Risk-taking in social settings: Group and peer effects," Discussion Papers 2013-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Ralf Bergheim & Michael W.M. Roos, 2013. "Intuition and Reasoning in Choosing Ambiguous and Risky Lotteries," Ruhr Economic Papers 0440, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Oechssler, Jörg & Roomets, Alex, 2014. "Unintended hedging in ambiguity experiments," Economics Letters, Elsevier, vol. 122(2), pages 243-246.
  6. Ken Binmore & Lisa Stewart & Alex Voorhoeve, 2012. "How much ambiguity aversion?," Journal of Risk and Uncertainty, Springer, vol. 45(3), pages 215-238, December.
  7. Seda Ertac & Mehmet Y. Gurdal, 2013. "Preference Communication and Leadership in Group Decision-Making," Koç University-TUSIAD Economic Research Forum Working Papers 1324, Koc University-TUSIAD Economic Research Forum.
  8. Keck, Steffen & Diecidue, Enrico & Budescu, David V., 2014. "Group decisions under ambiguity: Convergence to neutrality," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 60-71.
  9. Lahno, Amrei M., 2014. "Social anchor effects in decision-making under ambiguity," Discussion Papers in Economics 20960, University of Munich, Department of Economics.

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