Eliciting ambiguity with mixing bets

Patrick Schmidt

Papers from arXiv.org

Abstract: Preferences for mixing can reveal ambiguity perception and attitude on a single event. The validity of the approach is discussed for multiple preference classes including maxmin, maxmax, variational, and smooth second-order preferences. An experimental implementation suggests that participants perceive almost as much ambiguity for the stock index and actions of other participants as for the Ellsberg urn, indicating the importance of ambiguity in real-world decision-making.

Date: 2019-02, Revised 2024-08
New Economics Papers: this item is included in nep-mic and nep-upt
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