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Shooting in the Dark: Do Prices Matter in Ambiguous Environments?

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  • Utteeyo Dasgupta

Abstract

In an experiment, we evaluate whether prices of investment options influence choice in an ambiguous environment. We find that even with feedback on previous period’s investment, and repeated decision-making, prices do influence choice in our ambiguous environment. Modal behaviour is rational, that is, for each category of investment subjects choose the lowest available price. However, there is a tendency to associate high-priced ambiguous investment options with better quality. This effect becomes stronger as the price differences between available investment options become larger.

Suggested Citation

  • Utteeyo Dasgupta, 2016. "Shooting in the Dark: Do Prices Matter in Ambiguous Environments?," Studies in Microeconomics, , vol. 4(1), pages 1-12, June.
    • Handle: RePEc:sae:miceco:v:4:y:2016:i:1:p:1-12
    DOI: 10.1177/2321022215624038
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    References listed on IDEAS

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