Randomization advice and ambiguity aversion

• Published in: Journal of risk and uncertainty Vol. 69; no. 1; pp. 85 - 104
• Main Authors: Kuzmics, Christoph, Rogers, Brian W., Zhang, Xiannong
• Format: Journal Article
• Language: English
• 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

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...