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dc.contributor.authorViefers, Paulen_US
dc.description.abstractThis paper investigates the impact of uncertainty on an irreversible investment decisions in the laboratory. Subjects own the option to seize a claim on the future sum of realizations from an (ambiguous) random walk. I contrast model predicitions of the Subjective Expected Utility model (SEU, Savage, 1954) with model predictions made by Multiple-prior Expected Utility models (MEU, Gilboa & Schmeidler, 1989; Epstein & Schneider, 2003b). I present an experimental design that allows to identify behaviorally meaningful deviations from SEU. Observed behavior is at odds with the SEU prediction. On average, subjects in a treatment group, facing an ambiguous random walk, exhibit an ambiguity premium that presents a mark-up on average reservation profits in a control group. Hence, subjects shun to expose themselves to an ambiguous payoff process and invest later than participants facing a risky payoff process.en_US
dc.publisher|aDeutsches Institut für Wirtschaftsforschung (DIW) |cBerlinen_US
dc.relation.ispartofseries|aDIW Discussion Papers |x1228en_US
dc.subject.keywordAmbiguity aversionen_US
dc.subject.keywordmultiple priorsen_US
dc.subject.keywordoptimal stoppingen_US
dc.subject.keywordirreversible investmenten_US
dc.titleShould I stay or should I go? A laboratory analysis of investment opportunities under ambiguityen_US
dc.typeWorking Paperen_US

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