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Probabilistic ambiguity, outcome ambiguity or both: Does it matter for the decision-maker?

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  • Brunette, Marielle
  • Couture, Stéphane
  • Boun My, Kene

Abstract

Decisions under ambiguity are an integral part of the daily life of economic decision-makers. However, if ambiguity bears on the probability, on the outcome, or on both, making a decision then becomes non-trivial and the source of ambiguity can have a major impact on the decision. In this paper, we study how decision-makers react to these different sources of ambiguity. For that purpose, we implemented a lab experiment with 209 students. We found that decision-makers prefer risk over different sources of ambiguity. They also prefer outcome ambiguity to probabilistic ambiguity and double ambiguity. Interestingly, when ambiguity exists in both the outcome and probability, subjects prefer double ambiguity to probabilistic ambiguity.

Suggested Citation

  • Brunette, Marielle & Couture, Stéphane & Boun My, Kene, 2025. "Probabilistic ambiguity, outcome ambiguity or both: Does it matter for the decision-maker?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 117(C).
    • Handle: RePEc:eee:soceco:v:117:y:2025:i:c:s2214804325000576
    DOI: 10.1016/j.socec.2025.102390
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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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