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Ambiguous Information and Dilation: An Experiment

Author

Listed:
  • Denis Shishkin

    (University of California San Diego)

  • Pietro Ortoleva

    (Princeton University)

Abstract

With common models of updating under ambiguity, new information may increase the amount of relevant ambiguity: the set of priors may "dilate." We test experimentally 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. Under typical models, the set of priors should dilate, ambiguity averse agents should lower their value of bets, ambiguity seeking should increase it. Instead, we find that ambiguity averse agents do not change it, ambiguity seeking ones increase it substantially. We also test bets on ambiguous urns and find sizable reactions to ambiguous information.

Suggested Citation

  • Denis Shishkin & Pietro Ortoleva, 2021. "Ambiguous Information and Dilation: An Experiment," Working Papers 2020-53, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2020-53
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    References listed on IDEAS

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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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