Stake effects on ambiguity attitudes for gains and losses

We test the effect of stake size on ambiguity attitudes. Compared to a baseline condition, we find subjects to be more ambiguity seeking for small-probability gains and large-probability losses under high stakes. They are also more ambiguity averse for large-probability gains and small-probability losses. We trace these effects back to stake effects on decisions under risk (known probabilities) and uncertainty (unknown probabilities). For risk, we replicate previous findings. For uncertainty, we find an increase in probabilistic insensitivity under high stakes that is driven by increased uncertainty aversion for large-probability gains and for small-probability losses.     

MINIMUM LEVELS AND FRAMING IN PUBLIC GOOD PROVISION

Using a laboratory experiment in the field, we examine how the framing of a social dilemma, give to or take from a public good, interacts with a policy intervention that enforces a minimum contribution level to the public good. We find significantly higher cooperation in the give frame than in the take frame in our standard public goods experiment. When a minimum contribution level is introduced, contributions are crowded out in the give frame but crowded in in the take frame. Our results show the importance of choosing the frame when making policy recommendations. (JEL C91, H41)