Ambiguity attitudes, framing, and consistency

Alex Voorhoeve, Ken G Binmore, Arnaldur Stefansson and Lisa Stewart

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We use probability-matching variations on Ellsberg’s single-urn experiment to assess three questions: (1) How sensitive are ambiguity attitudes to changes from a gain to a loss frame? (2) How sensitive are ambiguity attitudes to making ambiguity easier to recognize? (3) What is the relation between subjects’ consistency of choice and the ambiguity attitudes their choices display? Contrary to most other studies, we find that a switch from a gain to a loss frame does not lead to a switch from ambiguity aversion to ambiguity neutrality and/or ambiguity seeking. We also find that making ambiguity easier to recognize has little effect. Finally, we find that while ambiguity aversion does not depend on consistency, other attitudes do: consistent choosers are much more likely to be ambiguity neutral, while ambiguity seeking is much more frequent among highly inconsistent choosers.

Keywords: ambiguity attitudes; framing; consistency of choice; Ellsberg paradox (search for similar items in EconPapers)
JEL-codes: C91 D0 (search for similar items in EconPapers)
Date: 2016-03-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published in Theory and Decision, 30, March, 2016, 81(3), pp. 313-337. ISSN: 0040-5833

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