Journal of Risk and Uncertainty

, Volume 4, Issue 1, pp 5–28 | Cite as

Preference and belief: Ambiguity and competence in choice under uncertainty

  • Chip Heath
  • Amos Tversky

Abstract

We investigate the relation between judgments of probability and preferences between bets. A series of experiments provides support for the competence hypothesis that people prefer betting on their own judgment over an equiprobable chance event when they consider themselves knowledgeable, but not otherwise. They even pay a significant premium to bet on their judgments. These data connot be explained by aversion to ambiguity, because judgmental probabilities are more ambiguous than chance events. We interpret the results in terms of the attribution of credit and blame. The possibility of inferring beliefs from preferences is questioned.1

Key words

ambiguity uncertainty preferences 

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Copyright information

© Kluwer Academic Publishers 1991

Authors and Affiliations

  • Chip Heath
    • 1
  • Amos Tversky
    • 2
  1. 1.Stanford UniversityUSA
  2. 2.Department of PsychologyStanford UniversityStanford

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