, Volume 46, Issue 1, pp 1-25

Ambiguity attitudes and social interactions: An experimental investigation

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Abstract

This paper reports the results of experiments testing prevalence of non-neutral ambiguity attitudes and how these attitudes change as a result of interpersonal interactions. To address the first question we conducted experiments involving individual choice between betting on ambiguous and unambiguous events of the subject’s choice. We found that a large majority of subjects display ambiguity neutral attitudes, many others display ambiguity incoherent attitudes, and few subjects display either ambiguity-averse attitudes or ambiguity-seeking attitudes. To address the second question we designed a new experiment with a built-in incentive to persuade. We found that interpersonal interactions without incentives to persuade have no effect on behavior. However, when incentives were introduced, the ambiguity neutral subjects were better able to persuade ambiguity seeking and ambiguity incoherent subjects to adopt ambiguity neutral choice behavior and, to a lesser extent, also ambiguity averse subjects.

We are grateful to Stefan Trautmann, Peter Duersch, Luca Rigotti and an anonymous referee for their useful comments. We also benefited from comments and suggestions of the participants of the conference on “Ambiguity: Theory and Experiments,” at the Center for the Economic Analysis of Risk, Georgia State University, September 20–21, 2012.