We design and implement a novel experimental test of subjective expected utility theory and its generalizations. Our … function, but not with subjective utility theory. The theory is tested by gauging how subjects respond to price changes. A … majority of subjects respond to price changes in the direction predicted by the theory, but not to a degree that makes them …

liquidation costs. In particular, in our model ambiguity aversion is observationally equivalent to increased risk aversion. This …

real economic activity growth, in line with a risk shock. Conversely, a certainty shock (a shock strongly decreasing …