Ambiguity attitudes and social interactions: An experimental investigation

• Published in: Journal of risk and uncertainty Vol. 46; no. 1; pp. 1 - 25
• Main Authors: Charness, Gary, Karni, Edi, Levin, Dan
• Format: Journal Article
• Language: English
• Published: Boston Spring Science + Business Media 01.02.2013; Springer US; Springer Science + Business Media; Springer Nature B.V
• Subjects: Ambiguity; Attitudes; Betting; Decision theory; Economic models; Economic statistics; Economic theory; Economic Theory/Quantitative Economics/Mathematical Methods; Economic uncertainty; Economics; Economics and Finance; Entscheidung unter Risiko; Environmental Economics; Expected utility; Experiment design; Experiments; Gambling; Incentives; Interpersonal attraction; Interpersonal relations; Microeconomics; Neutralism; Operations Research/Decision Theory; Paradoxes; Persuasion; Preferences; Price premiums; Probability; Public choice; Risk aversion; Risk aversion preference; Social behavior; Social interaction; Soziale Beziehungen; Studies; Test; Uncertainty; Willingness to pay; Ambiguity aversion; Ellsberg paradox; C91; Ambiguity attitudes; D81; C92
• ISSN: 0895-5646; 1573-0476
• DOI: 10.1007/s11166-012-9157-1

This paper reports the results of experiments testing prevalence of nonneutral ambiguity attitudes and how these attitudes change as a result of interpersonal interactions. To address the first question we conducted experiments involving individual choice between betting on ambiguous and unambiguous events of the subject's choice. We found that a large majority of subjects display ambiguity neutral attitudes, many others display ambiguity incoherent attitudes, and few subjects display either ambiguity-averse attitudes or ambiguity-seeking attitudes. To address the second question we designed a new experiment with a built-in incentive to persuade. We found that interpersonal interactions without incentives to persuade have no effect on behavior. However, when incentives were introduced, the ambiguity neutral subjects were better able to persuade ambiguity seeking and ambiguity incoherent subjects to adopt ambiguity neutral choice behavior and, to a lesser extent, also ambiguity averse subjects.