Ambiguity in Individual Choice and Market Environments: On the Importance of Comparative Ignorance

Jonathan Alevy ()

No 2011-04, Working Papers from University of Alaska Anchorage, Department of Economics

Abstract: After Ellsberg’s thought experiments brought focus to the relevance of missing information for choice, extensive efforts have been made to understand ambiguity theoretically and empirically (Ellsberg 1961). Fox and Tversky (1995) make an important contribution to understanding behavioral responses to ambiguity. In an individual choice setting they demonstrate that an aversion to ambiguous lotteries arises only when a comparison to unambiguous lotteries is available. The current study advances this literature by exploring the importance of Fox and Tversky’s finding for market outcomes and finds support for their Comparative Ignorance Hypothesis in the market setting.

Keywords: ambiguity; asset market experiment; comparitive ignorance (search for similar items in EconPapers)
JEL-codes: C91 C92 D81 G12 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-exp, nep-mic, nep-neu and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201104.pdf (application/pdf)

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:ala:wpaper:2011-04

Access Statistics for this paper

More papers in Working Papers from University of Alaska Anchorage, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Jonathan Alevy ().