Learning-by-doing in an ambiguous environment |
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Authors: | Jim Engle-Warnick Sonia Laszlo |
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Affiliation: | 1.Department of Economics,McGill University,Montreal,Canada;2.CIRANO,Montreal,Canada |
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Abstract: | How well do revealed ambiguity preferences predict how people choose to seek new information about uncertain events? In an economics experiment, we apply a new instrument to measure ambiguity preferences, and in a later session observe to what extent the measure predicts the choice to receive costly information in a learning-by-doing game. Ambiguity averse subjects are more willing to pay to receive information, while risk averse subjects are not. Holding ambiguity preferences constant, risk averse subjects tend to perform worse than risk loving subjects. The returns to experimentation, especially for ambiguity averse subjects, suggest a not-well studied but important role that ambiguity preferences play in decision-making under uncertainty. |
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