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Measuring higher order ambiguity preferences

Baillon,Aurelien
; 
Schlesinger,Harris
; 
van de Kuilen,Gijs
Abstract
We report the results from an experiment designed to measure attitudes towards ambiguity beyond ambiguity aversion. In particular, we implement recently-proposed model-free preference conditions of ambiguity prudence and ambiguity temperance. Ambiguity prudence has been shown to play an important role in precautionary behavior and the mere presence of ambiguity averse agents in markets. We observe that the majority of individuals’ decisions are consistent with ambiguity aversion, ambiguity prudence and ambiguity temperance. This finding confirms the prediction of many popular (specifications of) ambiguity models and has important implications for models of prevention behavior.
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2018-06
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Tilburg University Research Output Collection
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Keywords
higher-order preferences, prudence, ambiguity attitude, risk attitude, C91 - Laboratory, Individual Behavior, D81 - Criteria for Decision-Making under Risk and Uncertainty
Citation
Baillon, A, Schlesinger, H & van de Kuilen, G 2018, 'Measuring higher order ambiguity preferences', Experimental Economics, vol. 21, no. 2, pp. 233-256. https://doi.org/10.1007/s10683-017-9542-3
URI
https://hdl.handle.net/20.500.14602/70015
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