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Title:Attitudes towards Uncertainty and Randomization: An Experimental Study PDF Logo
Authors:Schnedler, Wendelin
Dominiak, Adam
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Individual Decision Making Under Risk and Uncertainty F15-V2
Abstract:Individuals exhibit a randomization preference if they prefer random mixtures of two bets to each of the involved bets. Such preferences provide the foundation of various models of uncertainty aversion. However, it has to our knowledge not been empirically investigated whether uncertainty-averse decision makers indeed exhibit such preferences. Here, we examine the relationship experimentally. We find that uncertainty aversion is not positively associated with randomization preferences. Moreover, we observe choices that are not consistent with the prevailing theories of uncertainty aversion: a non-negligible number of uncertain-averse subjects seem to dislike randomization.
Subjects:uncertainty aversion
randomization preference
ambiguity
Choquet expected utility model
maxmin expected utility model
experiment
JEL:C91
D80
D01
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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