The Effect of Elicitation Methods on Ambiguity Aversion: An Experimental Investigation
AbstractAbstract: In this paper we elicit preferences for the classical three-color Ellsberg Paradax employing three different methods, choices, minimal selling prices and maximal buying prices. The resulting data reveal a high frequency of preference reversal which not have been analyzed before in choice under uncertainty. Moreover, we analyze the effect of elicitation methods on the degree of ambiguity aversion. While there is no apparent difference in the attitude towards ambiguity between selling and buying prices we observe a rather distinct pattern of behavior for choices: Compared to choices eliciting preferences by pricing tasks decreases the number of subjects being ambiguity averse in both choice problems and increases the number of subjects being ambiguity neutral or prone. We argue that this difference between pricing and choice supports the hypothesis of comparative ignorance.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 01-44.
Length: 6 pages
Date of creation: 19 Jul 2001
Date of revision:
Web page: http://www.sfb504.uni-mannheim.de
Other versions of this item:
- Anna Maffioletti & Ulrich Schmidt & Carsten Schröder, 2009. "The effect of elicitation methods on ambiguity aversion: an experimental investigation," Economics Bulletin, AccessEcon, vol. 29(2), pages 638-643.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hogarth, Robin M & Kunreuther, Howard, 1989. " Risk, Ambiguity, and Insurance," Journal of Risk and Uncertainty, Springer, vol. 2(1), pages 5-35, April.
- 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.
- Ulrich Schmidt & John D. Hey, 2004. "Are Preference Reversals Errors? An Experimental Investigation," Journal of Risk and Uncertainty, Springer, vol. 29(3), pages 207-218, December.
- Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-17, March.
- Camerer, Colin & Kunreuther, Howard, 1989. " Experimental Markets for Insurance," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 265-99, September.
- Jonathan E. Alevy, 2011. "Ambiguity in Individual Choice and Market Environments: On the Importance of Comparative Ignorance," Working Papers 2011-04, University of Alaska Anchorage, Department of Economics.
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