Ambiguity attitudes in qualitative contexts: The role of prior beliefs

Abstract

Most studies of ambiguity aversion rely on experimental paradigms involving contrived monetary bets. Thus, the extent to which ambiguity aversion is evident outside of such contexts is largely unknown, particularly in those contexts which cannot easily be reduced to numerical terms. The present work seeks to understand whether ambiguity aversion occurs in a variety of different qualitative domains, such as work, family, love, friendship, exercise, study and health. We presented participants with 24 vignettes and measured the degree to which they preferred risk to ambiguity. In a separate study we asked participants for their prior probability estimates about the likely outcomes in the ambiguous events. Ambiguity aversion was observed in the vast majority of vignettes, but at different magnitudes. It was predicted by gain/loss direction but not by the prior probability estimates (with the interesting exception of the classic Ellsberg ‘urn’ scenario). Our results suggest that ambiguity aversion occurs in a wide variety of qualitative contexts, but to different degrees, and may not be generally driven by unfavourable prior probability estimates of ambiguous events.