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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 designed to test (a) whether and to what extent individuals display non-neutral ambiguity attitudes in their choice behavior and (b) if and how do ambiguity attitudes change as a result of interpersonal interactions and persuasion. To address the first question we designed and conducted experiments involving individual choice between betting on ambiguous and unambiguous events of their 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 introduced a new experimental design with a built-in incentive to persuade. We found that interpersonal interactions without incentive to persuade have no effect on behavior, but when incentives were introduced, the ambiguity-neutral subjects were better able to persuade ambiguity seeking and ambiguity-incoherent subjects to follow ambiguity-neutral choice behavior. No such influence was detected with respect to ambiguity-neutral subjects.

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 590.

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Date of creation: Feb 2012
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Handle: RePEc:jhu:papers:590

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  1. David Ahn & Syngjoo Choi & Douglas Gale & Shachar Kariv, 2008. "Estimating Ambiguity Aversion in a Portfolio Choice Experiment," Levine's Working Paper Archive 122247000000001989, David K. Levine.
  2. Frohlich, Norman & Oppenheimer, Joe & Bernard Moore, J., 2001. "Some doubts about measuring self-interest using dictator experiments: the costs of anonymity," Journal of Economic Behavior & Organization, Elsevier, vol. 46(3), pages 271-290, November.
  3. Yoram Halevy, 2007. "Ellsberg Revisited: An Experimental Study," Econometrica, Econometric Society, vol. 75(2), pages 503-536, 03.
  4. Fox, Craig R & Tversky, Amos, 1995. "Ambiguity Aversion and Comparative Ignorance," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 585-603, August.
  5. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
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