David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Ezio Di Nucci
Jack Alan Reynolds
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Theory and Decision 47 (2):157-184 (1999)
The Ellsberg Paradox documented the aversion to ambiguity in the probability of winning a prize. Using an original sample of 266 business owners and managers facing risks from climate change, this paper documents the presence of departures from rationality in both directions. Both ambiguity-seeking behavior and ambiguity-averse behavior are evident. People exhibit âfearâ effects of ambiguity for small probabilities of suffering a loss and âhopeâ effects for large probabilities. Estimates of the crossover point from ambiguity aversion (fear) to ambiguity seeking (hope) place this value between 0.3 and 0.7 for the risk per decade lotteries considered, with empirical estimates indicating a crossover mean risk of about 0.5. Attitudes toward the degree of ambiguity also reverse at the crossover point.
|Keywords||Ambiguity Risk Ellsberg Paradox|
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Sujoy Chakravarty & Jaideep Roy (2009). Recursive Expected Utility and the Separation of Attitudes Towards Risk and Ambiguity: An Experimental Study. [REVIEW] Theory and Decision 66 (3):199-228.
Laure Cabantous (2007). Ambiguity Aversion in the Field of Insurance: Insurers' Attitude to Imprecise and Conflicting Probability Estimates. [REVIEW] Theory and Decision 62 (3):219-240.
Marielle Brunette, Laure Cabantous, Stéphane Couture & Anne Stenger (2013). The Impact of Governmental Assistance on Insurance Demand Under Ambiguity: A Theoretical Model and an Experimental Test. [REVIEW] Theory and Decision 75 (2):153-174.
Robert Chambers & Tigran Melkonyan (2008). Eliciting Beliefs. Theory and Decision 65 (4):271-284.
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