Uncertainty effect revisited using physical lottery format

Ondrej Rydval, Andreas Ortmann, Sasha Prokosheva and Ralph Hertwig
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Sasha Prokosheva: CERGE-EI (a joint workplace of the Center for Economic Research and Graduate Education, Charles University, and the Economics Institute of the Academy of Sciences of the Czech Republic), Prague, Czech Republic
Ralph Hertwig: University of Basel, Switzerland

No 2009-002, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We replicate three pricing tasks of Gneezy, List and Wu (2006) for which they document the so called uncertainty effect, namely that people value a binary lottery over non-monetary outcomes less than other people value the lottery's worse outcome. Unlike the authors who implement a verbal lottery description, we use a physical lottery format which rules out any misinterpretation of the lottery structure. Contrary to Gneezy, List and Wu, we systematically observe that subjects' willingness to pay for the lottery is significantly higher than other subjects' willingness to pay for the lottery’s worse outcome.

Keywords: Risky choice; framing; experiments; task ambiguity (search for similar items in EconPapers)
JEL-codes: C81 C91 C93 D83 (search for similar items in EconPapers)
Date: 2009-01-06
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-002

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