Uncertainty effect revisited using physical lottery format
AbstractWe replicate three pricing tasks of Gneezy, List and Wu (2006) for which they document the so called uncertainty effect, namely that people value a binary lottery over non-monetary outcomes less than other people value the lottery's worse outcome. Unlike the authors who implement a verbal lottery description, we use a physical lottery format which rules out any misinterpretation of the lottery structure. Contrary to Gneezy, List and Wu, we systematically observe that subjects' willingness to pay for the lottery is significantly higher than other subjects' willingness to pay for the lotteryâ€™s worse outcome.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-002.
Date of creation: 06 Jan 2009
Date of revision:
Risky choice; framing; experiments; task ambiguity;
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-17 (All new papers)
- NEP-CBE-2009-01-17 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-01-17 (Experimental Economics)
- NEP-UPT-2009-01-17 (Utility Models & Prospect Theory)
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