above
the certainty level while for additive uncertainty the price should be lower than the certainty level. This note gives an intuitive explanation for the result after first presenting a parsimonious review of the two models. We also discuss which, if either, of the two models is more realistic.
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Received December 14, 2001; revised version received July 16, 2002 Published online: April 30, 2003
We thank referees for helpful comments. Ciaran Driver would like to acknowledge the research facilities from ANU, Canberra for their help in writing this paper.
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Driver, C., Valletti, T. Additive and Multiplicative Uncertainty Revisited: What Explains the Contrasting Biases?. JEcon 79, 187–198 (2003). https://doi.org/10.1007/s00712-002-0581-6
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DOI: https://doi.org/10.1007/s00712-002-0581-6