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Does Happiness Affect Attitude Towards Ambiguity? An Experimental Approach To Distinguish Between Subjective Prior And Act Under Ambiguity

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  • Ryoko Wada

    (Keiai University, Japan)

Abstract

In the choice experiments under ambiguous information, there is no consensus about how to create ambiguous information. This paper shows that the way ambiguous information is given to subjects affects the decision making of them. In order to measure the degree of pessimism or optimism about ungiven probabilities, I create randomness with subject interactions through transparent procedure. By using this methodology, I found that individuals who held pessimistic prior invest less into ambiguous securities. In addition, I found that the happiness of an individual affects their decision making of investment into ambiguous securities.

Suggested Citation

  • Ryoko Wada, "undated". "Does Happiness Affect Attitude Towards Ambiguity? An Experimental Approach To Distinguish Between Subjective Prior And Act Under Ambiguity," Review of Socio - Economic Perspectives 201708, Reviewsep.
    • Handle: RePEc:aly:journl:201708
    DOI: DOI:https://doi.org/10.19275/RSEP014
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    References listed on IDEAS

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    1. Peter Klibanoff & Massimo Marinacci & Sujoy Mukerji, 2005. "A Smooth Model of Decision Making under Ambiguity," Econometrica, Econometric Society, vol. 73(6), pages 1849-1892, November.
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    4. David Buschena & David Zilberman, 1999. "Testing the Effects of Similarity on Risky Choice: Implications for Violations of Expected Utility," Theory and Decision, Springer, vol. 46(3), pages 253-280, June.
    5. Yoshiro Tsutsui & Fumio Ohtake, 2012. "Asking About Changes In Happiness In A Daily Web Survey And Its Implication For The Easterlin Paradox," The Japanese Economic Review, Japanese Economic Association, vol. 63(1), pages 38-56, March.
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    7. Peter Bossaerts & Paolo Ghirardato & Serena Guarnaschelli & William R. Zame, 2010. "Ambiguity in Asset Markets: Theory and Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 23(4), pages 1325-1359, April.
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    More about this item

    Keywords

    Ambiguity aversion; SEU; MEU; α-MEU; Experimental economics;
    All these keywords.

    JEL classification:

    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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