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Valuing A Risky Prospect Less Than Its Worst Outcome: Uncertainty Effect or Task Ambiguity?

  • Andreas Ortmann


    (Center for Economic Research and Graduate Education, Charles University, and Economics Institute, Academy of Sciences of the Czech Republic (CERGE-EI).)

  • Alexandra Prokosheva

    (Center for Economic Research and Graduate Education, Charles University, and Economics Institute, Academy of Sciences of the Czech Republic (CERGE-EI).)

  • Ondrej Rydval

    (Max-Planck-Institute of Economics (Strategic Interaction Group), Jena, Germany)

  • Ralph Hertwig

    (University of Basel, Switzerland)

Gneezy, List and Wu [Q. J. Econ. 121 (2006) 1283-1309] document that lotteries are often valued less than the lotteries’ worst outcomes. We show how to undo this result.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2007-038.

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Date of creation: 18 Jul 2007
Date of revision:
Handle: RePEc:jrp:jrpwrp:2007-038
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  1. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
  2. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
  3. Daniel Ellsberg, 2000. "Risk, Ambiguity and the Savage Axioms," Levine's Working Paper Archive 7605, David K. Levine.
  4. George Wu & John List & Uri Gneezy, 2006. "The uncertainty effect: When a risky prospect is valued less than its worst possible outcome," Framed Field Experiments 00152, The Field Experiments Website.
  5. Rydval, Ondrej & Ortmann, Andreas, 2004. "How financial incentives and cognitive abilities affect task performance in laboratory settings: an illustration," Economics Letters, Elsevier, vol. 85(3), pages 315-320, December.
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