Randomization advice and ambiguity aversion

We design and implement lab experiments to evaluate the normative appeal of behavior arising from models of ambiguity-averse preferences. We report two main empirical findings. First, we demonstrate that behavior reflects an incomplete understanding of the problem, providing evidence that subjects d...

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Bibliographic Details
Published inJournal of risk and uncertainty Vol. 69; no. 1; pp. 85 - 104
Main Authors Kuzmics, Christoph, Rogers, Brian W., Zhang, Xiannong
Format Journal Article
LanguageEnglish
Published New York Springer US 01.08.2024
Springer Nature B.V
Subjects
Ambiguity
Behavior
Decision making
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Environmental Economics
Microeconomics
Operations Research/Decision Theory
Ambiguity aversion
Knightian uncertainty
C91
D81
Subjective expected utility
Lab experiment
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Summary:We design and implement lab experiments to evaluate the normative appeal of behavior arising from models of ambiguity-averse preferences. We report two main empirical findings. First, we demonstrate that behavior reflects an incomplete understanding of the problem, providing evidence that subjects do not act on the basis of preferences alone. Second, additional clarification of the decision making environment pushes subjects’ choices in the direction of ambiguity aversion models, regardless of whether or not the choices are also consistent with subjective expected utility, supporting the position that subjects find such behavior normatively appealing.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:0895-5646
1573-0476
DOI:10.1007/s11166-024-09436-4