Showing 91 - 100 of 32,424
In standard models of ambiguity, the evaluation of an ambiguous asset, as of a risky asset, is considered as an independent process. In this process only information directly pertaining to the ambiguous asset is used. These models face signi ficant challenges from the finding that ambiguity...
Persistent link: https://www.econbiz.de/10013091978
This paper focuses on information acquisition and individual decision making in ambiguous situations and presents a novel experimental design which may help to tackle open questions from a fresh perspective. Instead of giving subjects the choice between risky and ambiguous Ellsberg urns, we let...
Persistent link: https://www.econbiz.de/10013073252
This paper reports experiments conducted to test whether ambiguity affects individual behaviour in games of strategic complements and strategic substitutes. We study subject behaviour in the presence of ambiguity in order to ascertain whether subjects' perception of ambiguity differs between a...
Persistent link: https://www.econbiz.de/10013076658
This short paper demonstrates that the claim of Cumulative Prospect Theory (CPT) that people are risk seeking for loss prospects appears to be merely a result of using a specific form of the probability weighting function to estimate the power factor of the value function. Using experimental...
Persistent link: https://www.econbiz.de/10013153144
This short paper shows that the Allais Paradox and the Common Ratio Effect - regarded as classic examples of the violation of the Expected Utility Theory Axioms - may be easily explained by assuming that changes in wealth (i.e. gains and losses) are perceived in relative terms. The preference...
Persistent link: https://www.econbiz.de/10013153294
The ratio bias – according to which individuals prefer to bet on probabilities expressed as a ratio of large numbers to normatively equivalent or superior probabilities expressed as a ratio of small numbers – has recently gained momentum, with researchers especially in health economics...
Persistent link: https://www.econbiz.de/10013154975
Contract compliance is key for economic growth. However, determinants affecting contract breach are not yet well understood. In this paper, we focus on contract situations with a potential hold-up problem, such as contract farming agreements which are prevalent in many developing countries. We...
Persistent link: https://www.econbiz.de/10012836375
Trust is an important driver of economic transactions, but how do people decide whom to trust? We conduct an experiment to investigate whether people are able to predict trustworthiness by judging the face of a stranger. The behavior of the second player in the Trust Game is used as a measure of...
Persistent link: https://www.econbiz.de/10012961409
There has been very little research to test whether ambiguity affects individuals' decisions to insure themselves against the catastrophic effects of climate change. This paper attempts to study how individuals respond to the availability of an insurance that would safeguard their interests if a...
Persistent link: https://www.econbiz.de/10012961721
We report an experiment that infers true overconfidence in relative ability through actions, as opposed to reported beliefs. Subjects choose how to invest earnings from a skill task when the returns depend solely upon risk, or both risk and relative placement, enabling joint estimation of...
Persistent link: https://www.econbiz.de/10012962309