EconPapers    
Economics at your fingertips  
 

The strength of sensitivity to ambiguity

Robin Cubitt (), Gijs Kuilen and Sujoy Mukerji ()

Theory and Decision, 2018, vol. 85, issue 3, 275-302

Abstract: Abstract We report an experiment where each subject’s ambiguity sensitivity is measured by an ambiguity premium, a concept analogous to and comparable with a risk premium. In our design, some tasks feature known objective risks and others uncertainty about which subjects have imperfect, heterogeneous, information (“ambiguous tasks”). We show how the smooth ambiguity model can be used to calculate ambiguity premia. A distinctive feature of our approach is estimation of each subject’s subjective beliefs about the uncertainty in ambiguous tasks. We find considerable heterogeneity among subjects in beliefs and ambiguity premia; and that, on average, ambiguity sensitivity is about as strong as risk sensitivity.

Keywords: Ambiguity sensitivity; Ambiguity attitude; Measuring strength of ambiguity sensitivity; Smooth ambiguity model; Ambiguity premium (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11238-018-9657-9 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Strength of Sensitivity to Ambiguity (2017) Downloads
Working Paper: The Strength of Sensitivity to Ambiguity Downloads
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:theord:v:85:y:2018:i:3:d:10.1007_s11238-018-9657-9

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-12-03
Handle: RePEc:kap:theord:v:85:y:2018:i:3:d:10.1007_s11238-018-9657-9