Uncertainty aversion and preference for randomization

Wendelin Schnedler and Adam Dominiak

No 08-39, Papers from Sonderforschungsbreich 504

Abstract: Individuals exhibit preferences for randomization if they prefer random mixtures of two bets to each of the involved bets. Such preferences underpin various models of uncertainty aversion. However, it has to our knowledge not been empirically investigated whether uncertainty-averse decision makers indeed exhibit such preferences. Here, we examine the relationship experimentally. We find that uncertainty aversion is not positively associated with preferences for randomization. Moreover, we observe a puzzling behavior that is not predicted: a non-negligible number of uncertain-averse subjects seem to dislike randomization.

Keywords: uncertainty aversion; ambiguity; subjective expected utility; preference for randomization; Choquet expected utility; minmax utility (search for similar items in EconPapers)
JEL-codes: C9 D8 (search for similar items in EconPapers)
Date: 2008
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https://madoc.bib.uni-mannheim.de/2342/1/dp08_39.pdf

Related works:
Working Paper: Uncertainty Aversion and Preference for Randomization (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:mnh:spaper:2342

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