A Test of Dynamic Consistency and Consequentialism in the Presence of Ambiguity
David Kelsey and
No 1803, Discussion Papers from University of Exeter, Department of Economics
We test dynamic consistency and consequentialism, two key principles of dynamic decision making under ambiguity and relate violations of these principles to subjectsÕ ambiguity at- titudes. In our experiment, subjects received a signal which made it attractive for ambiguity averse subjects to deviate from their ex- ante contingent plan and violate dynamic consistency. We found that ambiguity averse subjects were indeed more likely to violate dynamic consistency than ambiguity neutral subjects, but not consequentialism.
Keywords: ambiguity; three-color Ellsberg paradox; consequentialism; dynamic consistency. (search for similar items in EconPapers)
JEL-codes: D72 D81 (search for similar items in EconPapers)
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