NANCY Seminar – Loïc Berger (IESEG)
The 2024/04/16
From 11:00am to 12:30pm
Event details :
Title: “Attitudes towards the Ambiguousness of Two-stage Prospects”
Abstract: Representation of uncertainty in terms of compound (multi-stage) lotteries underlies several modern theories of ambiguity. Empirically, the association between ambiguous and compound lotteries has been widely documented in the literature. Yet there exists almost no direct empirical test of ambiguity attitudes towards compound lotteries. In this paper, we aims to uncover the existence of specific attitudes towards ambiguity in compound prospects. Specifically, we measure ambiguity functions for compound lotteries that entail objective and subjective probabilities, using the matching probability approach proposed by Dimmock et al. (2016). Our investigation sheds light on the preferences over compound lotteries in three important ways. We provide (1) measurements scanning the entire probability domain, examining compound events with small, medium and large likelihoods, (2) a comprehensive analysis of ambiguity attitudes, including aversion and likelihood insensitivity, and (3) a comparison of the preferences of a convenience sample of students with those a unique pool of risk professionals to understand the potential role of sophistication.
