You Need to Recognise Ambiguity to Avoid It

Bibliographic Data

ID9709387
AuthorsChew Soo Hong (National University of Singapore), Mark Ratchford (0000-0002-0988-4047, Vanderbilt University), Jacob S Sagi (0000-0002-3939-1104, University of North Carolina at Chapel Hill)
Year2018
Volume128
Issue614
Pages2480-2506
Publication date2018-09-01
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12541
OpenAlexW195645725
LanguageEN
Citations received4
References cited34

After screening for attentiveness and comprehension, we present subjects with Ellsberg's (1961) two‐urn problem using essentially equivalent but representationally complex matrices. High‐comprehension subjects exhibit rates of ambiguity aversion typical of the standard two‐urn problem, while low‐comprehension subjects appear to randomise. In screening, we classify subjects as 'probability‐minded' or 'ambiguity‐minded', depending on whether they assign probabilities to draws from a card deck of unknown composition. Among high‐comprehension subjects, 'mindedness' explains twenty times more variation in ambiguity attitudes than all other demographic characteristics combined. Compared with their 'probability‐minded' counterparts, 'ambiguity‐minded' subjects are younger and more educated, analytic, and reflective about their choices

Ambiguity · Business · Programming language · Bayesian Modeling and Causal Inference · Computer Science · Decision-Making and Behavioral Economics · Experimental Behavioral Economics Studies

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