The effect of ex-post information in choice under ambiguity
Francesco D. Zaffuto,
Mateus Joffily and
Giorgio Coricelli
Chapter 16 in Financial Education and Risk Literacy, 2021, pp 262-271 from Edward Elgar Publishing
Abstract:
The source of uncertainty and the information about risky assets affect our decisions. In this study, we analyze uncertain choices in three main conditions: risk, ambiguity and ex-ante ambiguity. The first one is a standard risk condition in which outcome probabilities are objectively known. The other two conditions, ambiguity and ex-ante ambiguity, differ in terms of ambiguity resolution. In standard ambiguity, the exact outcome probabilities remain unknown at any time. Conversely, in ex-ante ambiguity, probabilities are revealed right after choices and the trial ends up with the same information as in risk condition. Our findings are two-fold. First, ambiguity aversion is reduced in ex-ante trials compared to standard ambiguity. Second, in a complete feedback setting, when the realized outcome of both chosen and unchosen lotteries are provided, the evaluation of the obtained outcome is shaped by a counterfactual thinking leading to regret and relief. The results of this study show how different levels of information about the choice probabilities affects our decisions and the emotional responses to the outcome of our choices. Thus suggesting a fundamental role of risk literacy and financial education to improve our decision-making under risk.
Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781789908848/9781789908848.00024.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable
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:elg:eechap:19356_16
Ordering information: This item can be ordered from
http://www.e-elgar.com
Access Statistics for this chapter
More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().