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Stake effects on ambiguity attitudes for gains and losses

Bouchouicha, R., Martinsson, P., Medhin, H. and Vieider, F. (2017) Stake effects on ambiguity attitudes for gains and losses. Theory and Decision, 83 (1). pp. 19-35. ISSN 1573-7187

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To link to this item DOI: 10.1007/s11238-016-9585-5

Abstract/Summary

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.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > Real Estate and Planning
Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:68380
Publisher:Springer

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