Preference reversals for ambiguity aversion

S.T. Trautmann, F.M. Vieider, P.P. Wakker

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper finds preference reversals in measurements of ambiguity aversion, even if psychological and informational circumstances are kept constant. The reversals are of a fundamentally different nature than the reversals found before because they cannot be explained by context-dependent weightings of attributes. We offer an explanation based on Sugden's random-reference theory, with different elicitation methods generating different random reference points. Then measurements of ambiguity aversion that use willingness to pay are confounded by loss aversion and hence overestimate ambiguity aversion.
Original languageEnglish
Pages (from-to)1320-1333
JournalManagement Science
Volume57
Issue number7
DOIs
Publication statusPublished - 2011

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Preference reversal
Ambiguity aversion
Reversal
Willingness-to-pay
Reference point
Loss aversion
Psychological
Weighting

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Trautmann, S.T. ; Vieider, F.M. ; Wakker, P.P. / Preference reversals for ambiguity aversion. In: Management Science. 2011 ; Vol. 57, No. 7. pp. 1320-1333.
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Preference reversals for ambiguity aversion. / Trautmann, S.T.; Vieider, F.M.; Wakker, P.P.

In: Management Science, Vol. 57, No. 7, 2011, p. 1320-1333.

Research output: Contribution to journalArticleScientificpeer-review

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