Preference Reversals for Ambiguity Aversion

Stefan Trautmann, Ferdinand Vieider () and Peter Wakker

Management Science, 2011, vol. 57, issue 7, 1320-1333

Abstract: This paper finds preference reversals in measurements of ambiguity aversion, even if psychological and informational circumstances are kept constant. The reversals are of a fundamentally different nature than the reversals found before because they cannot be explained by context-dependent weightings of attributes. We offer an explanation based on Sugden's random-reference theory, with different elicitation methods generating different random reference points. Then measurements of ambiguity aversion that use willingness to pay are confounded by loss aversion and hence overestimate ambiguity aversion. This paper was accepted by Teck Ho, decision analysis.

Keywords: ambiguity aversion; preference reversal; loss aversion; choice versus valuation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:57:y:2011:i:7:p:1320-1333

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