The influence of anchoring on the uncertainty effect

Naveh Eskinazi, Miki Malul, Mosi Rosenboim and Tal Shavit

Applied Economics Letters, 2025, vol. 32, issue 9, 1253-1256

Abstract: The uncertainty effect suggests that people may violate fundamental economic theories by pricing a binary lottery below its lowest outcome. This article examines the effect of anchoring on the uncertainty effect in a simple monetary binary lottery. We asked participants in an experiment about their willingness to pay in a simple lottery embedded with a numerical anchor. The results show that low (high) numerical anchoring exacerbates (ameliorates) the irrational behaviour causing the uncertainty effect.

Date: 2025
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DOI: 10.1080/13504851.2024.2302887

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