Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204529
Authors: 
Li, Wenhui
Wilde, Christian
Year of Publication: 
2019
Series/Report no.: 
SAFE Working Paper 251
Abstract: 
Decisions under ambiguity depend on both the belief regarding possible scenarios and the attitude towards ambiguity. This paper exclusively focuses on beliefs, measured independent from attitudes. We use laboratory experiments to elicit the subjective belief formation and belief updating process in an ambiguous environment. As a main contribution, we elicit the entire belief distribution of individual subjects. For almost half of the subjects, we can reject the objective equality hypothesis that one's initial prior follows a uniform distribution. The results also show that, when updating beliefs, more than half of the subjects closely follow the Bayes rule. The rest significantly deviate from Bayes. An investigation of a possible bias in beliefs reveals that subjects' beliefs are mostly neutral and do not display pessimism or optimism.
Subjects: 
ambiguity
learning strategy
belief updates
Bayesian updates
pessimism
laboratory experiments
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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