EconPapers    
Economics at your fingertips  
 

Is Ellsberg behavior evidence of ambiguity aversion?

Christoph Kuzmics, Brian W. Rogers () and Xiannong Zhang ()
Additional contact information
Brian W. Rogers: Washington University in St. Louis, USA
Xiannong Zhang: Washington University in St. Louis, USA

No 2019-07, Graz Economics Papers from University of Graz, Department of Economics

Abstract: We perform two types of lab experiments to assess the normative and positive appeal of preference models exhibiting ambiguity aversion. Our first experiment is a simple extension of the Ellsberg [1961] two-color urn experiment in which there is an option that hedges ambiguity away completely and that dominates the options that correspond to Ellsberg behavior. 63% of subjects choose the dominated Ellsberg options, which compares similarly to the proportion of subjects choosing the risky urn in the standard two-color experiment. While subjective expected utility cannot explain this choice, also none of the classical models of ambiguity aversion can explain this choice. Our second experiment is also based on the Ellsberg two-color urn experiment. In this experiment, in various treatments, we provide advice in the form of short video clips in favor of, as well as against, the Ellsberg choice. We find suggestive, but not conclusive, evidence that subjects' choices are influenced by advice and, in these cases, mostly in the direction of abandoning the Ellsberg option.

Keywords: Knightian uncertainty; Subjective expected utility; Ambiguity aversion; lab experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www100.uni-graz.at/vwlwww/forschung/RePEc/wpaper/2019-07.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:grz:wpaper:2019-07

Ordering information: This working paper can be ordered from
http://www100.uni-graz.at/vwlwww/forschung/RePEc/

Access Statistics for this paper

More papers in Graz Economics Papers from University of Graz, Department of Economics University of Graz, Universitaetsstr. 15/F4, 8010 Graz, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Michael Scholz ().

 
Page updated 2021-07-18
Handle: RePEc:grz:wpaper:2019-07