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Eliciting Ambiguity with Mixing Bets

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  • Patrick Schmidt

Abstract

Preferences for mixing can reveal ambiguity perception and attitude on a single event. The validity of the approach is discussed for multiple preference classes, including maxmin, maxmax, variational, and smooth second-order preferences. An experimental implementation suggests that participants perceive almost as much ambiguity for the stock index and actions of other participants as they do for the Ellsberg urn, indicating the importance of ambiguity in real-world decision-making.

Suggested Citation

  • Patrick Schmidt, 2025. "Eliciting Ambiguity with Mixing Bets," American Economic Journal: Microeconomics, American Economic Association, vol. 17(1), pages 354-388, February.
    • Handle: RePEc:aea:aejmic:v:17:y:2025:i:1:p:354-88
    DOI: 10.1257/mic.20220370
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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