IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_10898.html
   My bibliography  Save this paper

The Resolution of Uncertainty in the Value and Probability Domains

Author

Listed:
  • Eungik Lee
  • Kathleen Ngangoue
  • Andrew Schotter
  • Maryse Kathleen Ngangoue

Abstract

We compare preferences for temporal resolution when uncertainty is resolved over a probability rather than a value. In various frameworks–e.g., Kreps and Porteus (1978)–, preferences over gradual versus one-shot resolution do not depend on whether values or probabilities define the main object of uncertainty. In our experiment, however, most subjects resolved uncertain values gradually but uncertain probabilities all at once–both in the gain and loss frames. This systematic discrepancy motivates an explanation for it that we call “process utility”, which highlights the importance of information processing when deducing revealed preferences for temporal resolution from choice data.

Suggested Citation

  • Eungik Lee & Kathleen Ngangoue & Andrew Schotter & Maryse Kathleen Ngangoue, 2024. "The Resolution of Uncertainty in the Value and Probability Domains," CESifo Working Paper Series 10898, CESifo.
    • Handle: RePEc:ces:ceswps:_10898
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp10898.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 631-645.
    2. Chew, Soo Hong & Ho, Joanna L, 1994. "Hope: An Empirical Study of Attitude toward the Timing of Uncertainty Resolution," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 267-288, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Florian Zimmermann, 2015. "Clumped or Piecewise? Evidence on Preferences for Information," Management Science, INFORMS, vol. 61(4), pages 740-753, April.
    2. Thomas Epper & Helga Fehr-Duda, 2012. "The missing link: unifying risk taking and time discounting," ECON - Working Papers 096, Department of Economics - University of Zurich, revised Oct 2018.
    3. Ertac, Seda & Gumren, Mert & Gurdal, Mehmet Y., 2020. "Demand for decision autonomy and the desire to avoid responsibility in risky environments: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 77(C).
    4. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2019. "Digital Communication and Swift Trust," Post-Print halshs-02409314, HAL.
    5. Ranganathan, Kavitha & Lejarraga, Tomás, 2021. "Elicitation of risk preferences through satisficing," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    6. Kazi Iqbal & Asad Islam & John List & Vy Nguyen, 2021. "Myopic Loss Aversion and Investment Decisions: From the Laboratory to the Field," Framed Field Experiments 000730, The Field Experiments Website.
    7. Filiz-Ozbay, Emel & Guryan, Jonathan & Hyndman, Kyle & Kearney, Melissa & Ozbay, Erkut Y., 2015. "Do lottery payments induce savings behavior? Evidence from the lab," Journal of Public Economics, Elsevier, vol. 126(C), pages 1-24.
    8. Arthur Schram & Boris Van Leeuwen & Theo Offerman, 2013. "Superstars Need Social Benefits: An Experiment on Network Formation," Working Papers 1306, Departament Empresa, Universitat Autònoma de Barcelona, revised Jul 2013.
    9. Buser, Thomas & Ranehill, Eva & van Veldhuizen, Roel, 2021. "Gender differences in willingness to compete: The role of public observability," Journal of Economic Psychology, Elsevier, vol. 83(C).
    10. Kessel, Dany & Mollerstrom, Johanna & van Veldhuizen, Roel, 2021. "Can simple advice eliminate the gender gap in willingness to compete?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 138, pages 1-1.
    11. Dalton, Patricio S. & Nhung, Nguyen & Rüschenpöhler, Julius, 2020. "Worries of the poor: The impact of financial burden on the risk attitudes of micro-entrepreneurs," Journal of Economic Psychology, Elsevier, vol. 79(C).
    12. Pablo Brañas‐Garza & Matteo M. Galizzi & Jeroen Nieboer, 2018. "Experimental And Self‐Reported Measures Of Risk Taking And Digit Ratio (2d:4d): Evidence From A Large, Systematic Study," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1131-1157, August.
    13. Celse, Jeremy & Karakostas, Alexandros & Zizzo, Daniel John, 2023. "Relative risk taking and social curiosity," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 243-264.
    14. Oege Dijk, 2017. "For whom does social comparison induce risk-taking?," Theory and Decision, Springer, vol. 82(4), pages 519-541, April.
    15. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2017. "Does Aggregated Returns Disclosure Increase Portfolio Risk Taking?," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1971-2005.
    16. Iñigo Iturbe-Ormaetxe & Giovanni Ponti & Josefa Tomás, 2016. "Myopic Loss Aversion under Ambiguity and Gender Effects," PLOS ONE, Public Library of Science, vol. 11(12), pages 1-11, December.
    17. Luigi Mittone & Lucia Savadori, 2008. "Influence of time delay on choice between gambles: Savoring the emotion," CEEL Working Papers 0802, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    18. Kocher, Martin G. & Krawczyk, Michal & van Winden, Frans, 2014. "‘Let me dream on!’ Anticipatory emotions and preference for timing in lotteries," Journal of Economic Behavior & Organization, Elsevier, vol. 98(C), pages 29-40.
    19. Sandro Casal & Matteo Ploner & Alec N. Sproten, 2019. "Fostering The Best Execution Regime: An Experiment About Pecuniary Sanctions And Accountability In Fiduciary Money Management," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 600-616, January.
    20. Yohanes E. Riyanto & Jianlin Zhang, 2016. "Putting a price tag on others’ perceptions of us," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 480-499, June.

    More about this item

    Keywords

    resolution of uncertainty; probability; gradual resolution; one-shot resolution; process utility; non-instrumental information; Kreps-Porteus;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_10898. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.