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Ambiguity attitudes, framing, and consistency

Author

Listed:
  • Alex Voorhoeve

    () (LSE)

  • Ken Binmore

    (UCL)

  • Arnaldur Stefansson

    (Uppsala University)

  • Lisa Stewart

    (The Australian National University)

Abstract

Abstract We use probability-matching variations on Ellsberg’s single-urn experiment to assess three questions: (1) How sensitive are ambiguity attitudes to changes from a gain to a loss frame? (2) How sensitive are ambiguity attitudes to making ambiguity easier to recognize? (3) What is the relation between subjects’ consistency of choice and the ambiguity attitudes their choices display? Contrary to most other studies, we find that a switch from a gain to a loss frame does not lead to a switch from ambiguity aversion to ambiguity neutrality and/or ambiguity seeking. We also find that making ambiguity easier to recognize has little effect. Finally, we find that while ambiguity aversion does not depend on consistency, other attitudes do: consistent choosers are much more likely to be ambiguity neutral, while ambiguity seeking is much more frequent among highly inconsistent choosers.

Suggested Citation

  • Alex Voorhoeve & Ken Binmore & Arnaldur Stefansson & Lisa Stewart, 2016. "Ambiguity attitudes, framing, and consistency," Theory and Decision, Springer, vol. 81(3), pages 313-337, September.
  • Handle: RePEc:kap:theord:v:81:y:2016:i:3:d:10.1007_s11238-016-9544-1
    DOI: 10.1007/s11238-016-9544-1
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    References listed on IDEAS

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    Cited by:

    1. repec:kap:theord:v:85:y:2018:i:3:d:10.1007_s11238-018-9657-9 is not listed on IDEAS
    2. Nihad Aliyev & Xue-Zhong He, 2017. "Ambiguous Market Making," Research Paper Series 383, Quantitative Finance Research Centre, University of Technology, Sydney.
    3. Mark Schneider & Jonathan W. Leland & Nathaniel T. Wilcox, 2018. "Ambiguity framed," Journal of Risk and Uncertainty, Springer, vol. 57(2), pages 133-151, October.
      • Mark Schneider & Jonathan Leland & Nathaniel T. Wilcox, 2016. "Ambiguity Framed," Working Papers 16-11, Chapman University, Economic Science Institute.
    4. Robin Cubitt & Gijs Kuilen & Sujoy Mukerji, 2018. "The strength of sensitivity to ambiguity," Theory and Decision, Springer, vol. 85(3), pages 275-302, October.
    5. repec:spr:homoec:v:34:y:2017:i:4:d:10.1007_s41412-017-0056-1 is not listed on IDEAS

    More about this item

    Keywords

    Ambiguity attitudes; Framing; Consistency of choice; Ellsberg paradox;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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