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Learning By Doing In An Ambiguous Environment

  • Jim Engle-Warnick

    ()

  • Sonia Laszlo Author Email: sonia.laszlo@mcgill.ca

We experimentally test whether risk aversion or ambiguity aversion can explain decisions in a learning by doing game. We first measure subjects' preferences toward risk and ambiguity, and then use these measures to predict behavior in the game. We find that ambiguity averse subjects pay more often to resolve ambiguity in the game. We also find that less risk averse subjects earn more in the game. Our results, in light of a previous field study of rural farmers in a developing economy, suggest a link between ambiguity aversion and technology choice, as well as a link between risk aversion and farm profitability.

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File URL: http://www.mcgill.ca/files/economics/learningbydoing.pdf
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Paper provided by McGill University, Department of Economics in its series Departmental Working Papers with number 2006-29.

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Length: 35 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:mcl:mclwop:2006-29
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  1. Jim Engle-Warnick & Javier Escobal & Sonia Laszlo, 2007. "Ambiguity Aversion As A Predictor Of Technology Choice: Experimental Evidence From Peru," Departmental Working Papers 2007-04, McGill University, Department of Economics.
  2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  3. Jim Engle-Warnick & Nurlan Turdaliev, 2006. "An Experimental Test of Taylor-Type Rules with Inexperienced Central Bankers," CIRANO Working Papers 2006s-05, CIRANO.
  4. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
  5. Antle, John M & Crissman, Charles C, 1990. "Risk, Efficiency, and the Adoption of Modern Crop Varieties: Evidence from the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 38(3), pages 517-37, April.
  6. Abigail Barr, 2003. "Risk Pooling, Commitment and Information: An experimental test of two fundamental assumptions," Working Papers 2082, The Field Experiments Website.
  7. John H. Kagel & Alvin E. Roth, 2000. "The Dynamics Of Reorganization In Matching Markets: A Laboratory Experiment Motivated By A Natural Experiment," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 201-235, February.
  8. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Monash Economics Working Papers archive-01, Monash University, Department of Economics.
  9. Jovanovic, B. & Nyarko, Y., 1996. "Learning by Doing and the Choice of Technology," Working Papers 96-25, C.V. Starr Center for Applied Economics, New York University.
  10. Merlo, A. & Schotter, A., 2001. "Learning By Not Doing: An Experimental Investigation of Observational Learning," Working Papers 01-09, C.V. Starr Center for Applied Economics, New York University.
  11. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  12. John Knight & Sharada Weir & Tassew Woldehanna, 2003. "The role of education in facilitating risk-taking and innovation in agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 1-22.
  13. Hans Binswanger, 1980. "Attitudes toward risk: Experimental measurement in rural india," Artefactual Field Experiments 00009, The Field Experiments Website.
  14. Catherine Eckel & Cathleen Johnson & Claude Montmarquette, 2004. "Saving Decisions of the Working Poor: Short-and Long-Term Horizons," CIRANO Working Papers 2004s-45, CIRANO.
  15. Jason Abrevaya, 2002. "Computing Marginal Effects In The Box-Cox Model," Econometric Reviews, Taylor & Francis Journals, vol. 21(3), pages 383-393.
  16. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
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