Testing constant absolute and relative ambiguity aversion

A-Tier
Journal: Journal of Economic Theory
Year: 2019
Volume: 181
Issue: C
Pages: 309-332

Authors (2)

Baillon, Aurélien (EMLYON Business School) Placido, Lætitia (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Recent applications have demonstrated the crucial role of decreasing absolute ambiguity aversion in financial and saving decisions. Yet, most ambiguity models predict that ambiguity aversion remains constant when individuals become better off overall. We propose the first tests of constant absolute and relative ambiguity aversion, using simple variations of the Ellsberg paradoxes. Our tests are axiomatically founded and grounded in the theoretical literature. We implemented these tests in an experiment. Our results call for the use of ambiguity models that can accommodate decreasing aversion toward ambiguity.

Technical Details

RePEc Handle
repec:eee:jetheo:v:181:y:2019:i:c:p:309-332
Journal Field
Theory
Author Count
2
Added to Database
2026-01-24