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Volkswirtschaft - Open Access LMU - Teil 03/03 Podcast
Ambiguity aversion is the exception

Ambiguity aversion is the exception

Volkswirtschaft - Open Access LMU - Teil 03/03 vor 11 Jahren

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An extensive literature has studied ambiguity aversion in economic
decision making, and how ambiguity aversion can account for
empirically observed violations of expected utility-based theories.
Almost all relevant applied models presume a general dislike of
ambiguity. In this paper, we provide a systematic experimental
assessment of ambiguity attitudes in different likelihood ranges
and in the gain domain, the loss Domain and with mixed outcomes. We
draw on a unified framework with more than 500 participants and
find that ambiguity aversion is the exception, not the rule. We
replicate the usual finding of ambiguity aversion for moderate
likelihood gains. However, when introducing losses or lower
likelihoods, we observe either ambiguity neutrality or even
ambiguity seeking behavior. Our results are robust to different
elicitation procedures.