The Rich Domain of Ambiguity Explored

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACT. Ellsberg and others suggested that decision under ambiguity is a rich empirical domain with many phenomena to be investigated beyond the Ellsberg urns. We provide a systematic empirical investigation of this richness by varying both the uncertain events, the outcomes, and combinations of these. Although ambiguity aversion is prevailing, we also find systematic ambiguity seeking, confirming insensitivity. We find that ambiguity attitudes depend on the source of uncertainty (the kind of uncertain event) but not on the outcomes. Ambiguity attitudes are closer to rationality (ambiguity neutrality) for natural uncertainties than for the Ellsberg urns, as appearing from the reductions of monotonicity violations and of insensitivity. Terms of use: Documents in EconStor mayOur rich domain serves well to test families of weighting functions for fitting ambiguity attitudes.We find that two-parameter families, capturing not only aversion but also insensitivity, are desirable for ambiguity even more than for risk. The Goldstein-Einhorn family performs best for ambiguity.

Towards a general class of parametric probability weighting functions

“…Thus, in line with the empirical estimates, the probability weighting functions are regressive (first they have values greater than the identity function, then they have values less than the diagonal), inverse S-shaped (first concave, then convex) and asymmetric (intersecting the diagonal at one third) (see, e.g. Levy 1992;Li et al 2017;Offerman et al 2009;Prelec 1998).…”

Ambiguity and Excuse-Driven Behavior in Charitable Giving

“…While we implemented two levels of ambiguity, we did not find any behavioral differences when subjects face full or partial ambiguity. This lack of effect of the level of ambiguity on behavior could be related to the higher importance of the source of uncertainty on ambiguity attitudes compared to its level (Abdellaoui et al, 2011;Li et al, 2017). As our two levels of uncertainty were provided using the same source (a computerized random generator), subjects may not have distinguished between them in their own valuations, nor did they use the increase in the ambiguity level as an excuse to give less.…”

Ambiguity, Managerial Ability, and Growth Options

“…The distinction between risk and uncertainty as theorized by Keynes (1921) and Knight (1921) has led to a plethora of empirical studies on the role of ambiguity in economic choice since Ellsberg (1961) (Abdellaoui et al, 2011(Abdellaoui et al, , 2020Li et al, 2018). Viewed as uncertainty beyond risk, or the lack of information clarity about future prospects, ambiguity has been found to explain cognition and individual behaviour in a number of experimental and natural settings (Baillon and L'Haridon, 2016;Baillon et al, 2018b).…”