Ambiguity aversion and the degree of ambiguity

Ronald Klingebiel () and Feibai Zhu
Additional contact information
Ronald Klingebiel: Frankfurt School of Finance and Management
Feibai Zhu: Frankfurt School of Finance and Management

Journal of Risk and Uncertainty, 2023, vol. 67, issue 3, No 4, 299-324

Abstract: Abstract We empirically show that sample information not only moderates prospects’ outcome ambiguity but also decision makers’ revealed aversion of them. Since most natural prospects permit at least some sample inference, accounting for their degree of ambiguity improves prediction of aversion. The special case of full ambiguity, as in Ellsberg-type designs, is typically averted—yet many decision makers systematically like low degrees of ambiguity while disliking higher degrees. Ambiguity attitudes might thus usefully be characterized by not only their sensitivity to degrees of ambiguity but also such ambiguity thresholds. Just as people like some risks but not others, they have ambiguity attitudes that depend on how much ambiguity there is. We thus show how attitudes towards a degree of ambiguity are systematic, enabling prediction across sources of ambiguity.

Keywords: Ambiguity preferences; Decision making under uncertainty; Risky choice; Confidence thresholds (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11166-023-09410-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrisku:v:67:y:2023:i:3:d:10.1007_s11166-023-09410-6

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11166/PS2

DOI: 10.1007/s11166-023-09410-6

Access Statistics for this article

Journal of Risk and Uncertainty is currently edited by W. Kip Viscusi

More articles in Journal of Risk and Uncertainty from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().