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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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