The effect of ex-post information in choice under ambiguity

The source of uncertainty and the information about risky assets affect our decisions. In this study, we analyze uncertain choices in three main conditions: risk, ambiguity and ex-ante ambiguity. The first one is a standard risk condition in which outcome probabilities are objectively known. The other two conditions, ambiguity and ex-ante ambiguity, differ in terms of ambiguity resolution. In standard ambiguity, the exact outcome probabilities remain unknown at any time. Conversely, in ex-ante ambiguity, probabilities are revealed right after choices and the trial ends up with the same information as in risk condition. Our findings are two-fold. First, ambiguity aversion is reduced in ex-ante trials compared to standard ambiguity. Second, in a complete feedback setting, when the realized outcome of both chosen and unchosen lotteries are provided, the evaluation of the obtained outcome is shaped by a counterfactual thinking leading to regret and relief. The results of this study show how different levels of information about the choice probabilities affects our decisions and the emotional responses to the outcome of our choices. Thus suggesting a fundamental role of risk literacy and financial education to improve our decision-making under risk.