Advanced Search
MyIDEAS: Login

Combining imprecise or conflicting probability judgments: A choice-based study

Contents:

Author Info

Abstract

Sources of uncertainty appear to affect attitude towards ambiguity. For instance, when two advisors agree on a range of probabilities and, when they disagree - one advisor predicting the upper bound of the range while the other predicts the lower bound of the range †decision-makers might have different beliefs about the risk although in both case the mean probability is the same. This study draws upon prospect theory and ambiguity research to empirically test how sources of uncertainty affect decision-makers†beliefs. It contrasts revealed beliefs †the precise probability leading to the same choice as an uncertain probability forecast †with judged beliefs †decision-makers†best estimate of the probability of the risk. It also equips beliefs with two properties - pessimism and likelihood sensitivity†to allow them to vary as a function of the source of uncertainty. Two experiments compare beliefs across sources of uncertainty and across elicitation methods (judged vs. revealed beliefs). Findings support the predictions that the source of ambiguity matters in particular for low and high probability events and that revealed and judged beliefs differ.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nottingham.ac.uk/~lizecon/RePEc/bbr/pdf/3.pdf
Download Restriction: no

Bibliographic Info

Paper provided by International Centre for Behavioural Business Research in its series ICBBR Working Papers with number 3.

as in new window
Length:
Date of creation: 13 Jul 2009
Date of revision:
Handle: RePEc:bbr:workpa:3

Contact details of provider:
Postal: Jubilee Campus, Nottingham NG2 8BB
Phone: +44-115-846 66 02
Fax: +44-115-846 66 67
Email:
Web page: http://www.nottingham.ac.uk/business/
More information through EDIRC

Related research

Keywords: Ambiguity; Source of uncertainty; Beliefs; Aggregation; Prospect theory;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Legerstee, R. & Franses, Ph.H.B.F., 2010. "Does Disagreement Amongst Forecasters have Predictive Value?," Econometric Institute Research Papers EI 2010-53, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bbr:workpa:3. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laure Cabantous).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.