The Resolution of Uncertainty in the Value and Probability Domains

Eungik Lee, Kathleen Ngangoue, Andrew Schotter and Maryse Kathleen Ngangoue

No 10898, CESifo Working Paper Series from CESifo

Abstract: We compare preferences for temporal resolution when uncertainty is resolved over a probability rather than a value. In various frameworks–e.g., Kreps and Porteus (1978)–, preferences over gradual versus one-shot resolution do not depend on whether values or probabilities define the main object of uncertainty. In our experiment, however, most subjects resolved uncertain values gradually but uncertain probabilities all at once–both in the gain and loss frames. This systematic discrepancy motivates an explanation for it that we call “process utility”, which highlights the importance of information processing when deducing revealed preferences for temporal resolution from choice data.

Keywords: resolution of uncertainty; probability; gradual resolution; one-shot resolution; process utility; non-instrumental information; Kreps-Porteus (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp, nep-rmg and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10898

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