Ambiguous information and dilation: An experiment

Denis Shishkin, Pietro Ortoleva

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

With standard models of updating under ambiguity, new information may increase the amount of relevant ambiguity: the set of beliefs may ‘dilate.’ We experimentally test one sharp case: agents bet on a risky urn and get information that is truthful or not based on the draw from an Ellsberg urn. With common models, the set of beliefs dilates, and the value of bets decreases for ambiguity-averse agents and increases for ambiguity-seeking ones. Instead, we find that the value of bets does not change for ambiguity-averse individuals, while it increases substantially for ambiguity-seeking ones. We also test bets on ambiguous urns, in which case we find sizable reactions to ambiguous information.

Original languageEnglish (US)
Article number105610
JournalJournal of Economic Theory
Volume208
DOIs
StatePublished - Mar 2023

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Ambiguity aversion
  • Ambiguous information
  • Ellsberg paradox
  • Maxmin expected utility
  • Updating

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