Ambiguous Information and Dilation: An Experiment

Denis Shishkin and Pietro Ortoleva
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Denis Shishkin: University of California San Diego
Pietro Ortoleva: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: With common models of updating under ambiguity, new information may increase the amount of relevant ambiguity: the set of priors may "dilate." We test experimentally one sharp case: agents bet on a risky urn and get information that is truthful or not based on the draw from an Ellsberg urn. Under typical models, the set of priors should dilate, ambiguity averse agents should lower their value of bets, ambiguity seeking should increase it. Instead, we find that ambiguity averse agents do not change it, ambiguity seeking ones increase it substantially. We also test bets on ambiguous urns and find sizable reactions to ambiguous information.

Keywords: Updating; Ambiguous Information; Ambiguity Aversion; Ellsberg Paradox; Maxmin Expected Utility (search for similar items in EconPapers)
JEL-codes: C91 D81 D90 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-ban, nep-exp and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2020-53

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