Baillon, Aurélien; Bleichrodt, Han - In: American Economic Journal: Microeconomics 7 (2015) 2, pp. 77-100
This paper reports on two experiments that test the descriptive validity of ambiguity models using a natural source of uncertainty (the evolution of stock indices) and both gains and losses. We observed violations of probabilistic sophistication, violations that imply a fourfold pattern of...