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Comparative ignorance hypothesis and business training

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  • Shapiro, Dmitry A.

Abstract

The comparative ignorance hypothesis, first demonstrated in Heath and Tversky (1991), is that ambiguity aversion is driven by the comparison with more familiar events or more knowledgeable individuals. For example, when own ignorance is perceived to be higher, individuals tend to exhibit stronger ambiguity aversion. We use this insight to provide a theoretical explanation to a well-documented phenomenon of business training having limited, or even negative, effect on post-training profits of program participants.

Suggested Citation

  • Shapiro, Dmitry A., 2020. "Comparative ignorance hypothesis and business training," Economics Letters, Elsevier, vol. 197(C).
    • Handle: RePEc:eee:ecolet:v:197:y:2020:i:c:s0165176520304006
    DOI: 10.1016/j.econlet.2020.109640
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    References listed on IDEAS

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    More about this item

    Keywords

    Comparative ignorance hypothesis; Business training; Ambiguity aversion;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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