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Ambiguous information and dilation: An experiment

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  • Shishkin, Denis
  • Ortoleva, Pietro

Abstract

With standard models of updating under ambiguity, new information may increase the amount of relevant ambiguity: the set of beliefs may ‘dilate.’ We experimentally test one sharp case: agents bet on a risky urn and get information that is truthful or not based on the draw from an Ellsberg urn. With common models, the set of beliefs dilates, and the value of bets decreases for ambiguity-averse agents and increases for ambiguity-seeking ones. Instead, we find that the value of bets does not change for ambiguity-averse individuals, while it increases substantially for ambiguity-seeking ones. We also test bets on ambiguous urns, in which case we find sizable reactions to ambiguous information.

Suggested Citation

  • Shishkin, Denis & Ortoleva, Pietro, 2023. "Ambiguous information and dilation: An experiment," Journal of Economic Theory, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:jetheo:v:208:y:2023:i:c:s0022053123000066
    DOI: 10.1016/j.jet.2023.105610
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    Cited by:

    1. Henkel, Luca, 2024. "Experimental evidence on the relationship between perceived ambiguity and likelihood insensitivity," Games and Economic Behavior, Elsevier, vol. 145(C), pages 312-338.
    2. Kops, Christopher & Pasichnichenko, Illia, 2023. "Testing negative value of information and ambiguity aversion," Journal of Economic Theory, Elsevier, vol. 213(C).
    3. Li, Jiangyan & Fairley, Kim & Fenneman, Achiel, 2024. "Does it matter how we produce ambiguity in experiments?," MPRA Paper 122336, University Library of Munich, Germany.
    4. Sebastian Schweighofer-Kodritsch, 2024. "Bounded Rationality, Beliefs, and Behavior," Berlin School of Economics Discussion Papers 0037, Berlin School of Economics.

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    More about this item

    Keywords

    Updating; Ambiguous information; Ambiguity aversion; Ellsberg paradox; Maxmin expected utility;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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