Ambiguous information and dilation: An experiment

Denis Shishkin; Pietro Ortoleva

doi:10.1016/j.jet.2023.105610

Ambiguous information and dilation: An experiment

Denis Shishkin, Pietro Ortoleva

Princeton School of Public and International Affairs

Research output: Contribution to journal › Article › peer-review

6 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 language	English (US)
Article number	105610
Journal	Journal of Economic Theory
Volume	208
DOIs	https://doi.org/10.1016/j.jet.2023.105610
State	Published - 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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10.1016/j.jet.2023.105610

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abstract = "With standard models of updating under ambiguity, new information may increase the amount of relevant ambiguity: the set of beliefs may {\textquoteleft}dilate.{\textquoteright} 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.",

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AU - Ortoleva, Pietro

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Ambiguous information and dilation: An experiment

Abstract

All Science Journal Classification (ASJC) codes

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