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Off the charts: massive unexplained heterogeneity in a global study of ambiguity attitudes

l'Haridon, O., Vieider, F. M., Aycinena, D., Bandur, A., Belianin, A., Cingl, A., Kothiyal, A. and Martinsson, P. (2018) Off the charts: massive unexplained heterogeneity in a global study of ambiguity attitudes. Review of Economics and Statistics. ISSN 1530-9142

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To link to this item DOI: 10.1162/rest_a_00724

Abstract/Summary

Ambiguity attitudes have been indicated as important determinants of economic outcomes in economic models, but we still know little about the demographic correlates of ambiguity attitudes, or indeed about the universality of patterns found in the West. We analyse the ambiguity attitudes of almost 3000 students across 30 countries. For gains we find ambiguity aversion everywhere, while ambiguity aversion is much weaker for losses. We also find ambiguity attitudes to systematically change with probabilities for both gains and losses, reflecting ambiguity-insensitivity to probabilities. Much of the between-country variation can be explained through a few macroeconomic characteristics. In contrast, we find massive unexplained variation at the individual level, suggesting that individual differences in ambiguity attitudes remain difficult to explain. We also find much unexplained heterogeneity in individual responses to different decision tasks. We conclude by discussing potential issues underlying this heterogeneity, and indicating potential solutions

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:72873
Publisher:MIT Press

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