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The influence of anchoring on the uncertainty effect

Author

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  • Naveh Eskinazi
  • Miki Malul
  • Mosi Rosenboim
  • Tal Shavit

Abstract

The uncertainty effect suggests that people may violate fundamental economic theories by pricing a binary lottery below its lowest outcome. This article examines the effect of anchoring on the uncertainty effect in a simple monetary binary lottery. We asked participants in an experiment about their willingness to pay in a simple lottery embedded with a numerical anchor. The results show that low (high) numerical anchoring exacerbates (ameliorates) the irrational behaviour causing the uncertainty effect.

Suggested Citation

  • Naveh Eskinazi & Miki Malul & Mosi Rosenboim & Tal Shavit, 2025. "The influence of anchoring on the uncertainty effect," Applied Economics Letters, Taylor & Francis Journals, vol. 32(9), pages 1253-1256, May.
    • Handle: RePEc:taf:apeclt:v:32:y:2025:i:9:p:1253-1256
    DOI: 10.1080/13504851.2024.2302887
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