Randomization advice and ambiguity aversion

Christoph Kuzmics, Brian W. Rogers () and Xiannong Zhang ()
Additional contact information
Brian W. Rogers: Washington University in St. Louis
Xiannong Zhang: Google LLC

Journal of Risk and Uncertainty, 2024, vol. 69, issue 1, No 4, 85-104

Abstract: Abstract We design and implement lab experiments to evaluate the normative appeal of behavior arising from models of ambiguity-averse preferences. We report two main empirical findings. First, we demonstrate that behavior reflects an incomplete understanding of the problem, providing evidence that subjects do not act on the basis of preferences alone. Second, additional clarification of the decision making environment pushes subjects’ choices in the direction of ambiguity aversion models, regardless of whether or not the choices are also consistent with subjective expected utility, supporting the position that subjects find such behavior normatively appealing.

Keywords: Knightian uncertainty; Subjective expected utility; Ambiguity aversion; Lab experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Randomization advice and ambiguity aversion (2024)
Working Paper: Randomization advice and ambiguity aversion (2023)
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DOI: 10.1007/s11166-024-09436-4

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