The strength of sensitivity to ambiguity
We report an experiment where each subject’s ambiguity sensitivity is measured by an ambiguity premium, a concept analogous to and comparable with a risk premium. In our design, some tasks feature known objective risks and others uncertainty about which subjects have imperfect, heterogeneous, inform...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Springer
2018
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| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/50668/ |
| _version_ | 1848798310005997568 |
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| author | Cubitt, Robin van de Kuilen, Gijs Mukerji, Sujoy |
| author_facet | Cubitt, Robin van de Kuilen, Gijs Mukerji, Sujoy |
| author_sort | Cubitt, Robin |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | We report an experiment where each subject’s ambiguity sensitivity is measured by an ambiguity premium, a concept analogous to and comparable with a risk premium. In our design, some tasks feature known objective risks and others uncertainty about which subjects have imperfect, heterogeneous, information (“ambiguous tasks”). We show how the smooth ambiguity model can be used to calculate ambiguity premia. A distinctive feature of our approach is estimation of each subject’s subjective beliefs about the uncertainty in ambiguous tasks. We find considerable heterogeneity among subjects in beliefs and ambiguity premia; and that, on average, ambiguity sensitivity is about as strong as risk sensitivity. |
| first_indexed | 2025-11-14T20:17:44Z |
| format | Article |
| id | nottingham-50668 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:17:44Z |
| publishDate | 2018 |
| publisher | Springer |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-506682018-03-26T10:50:06Z https://eprints.nottingham.ac.uk/50668/ The strength of sensitivity to ambiguity Cubitt, Robin van de Kuilen, Gijs Mukerji, Sujoy We report an experiment where each subject’s ambiguity sensitivity is measured by an ambiguity premium, a concept analogous to and comparable with a risk premium. In our design, some tasks feature known objective risks and others uncertainty about which subjects have imperfect, heterogeneous, information (“ambiguous tasks”). We show how the smooth ambiguity model can be used to calculate ambiguity premia. A distinctive feature of our approach is estimation of each subject’s subjective beliefs about the uncertainty in ambiguous tasks. We find considerable heterogeneity among subjects in beliefs and ambiguity premia; and that, on average, ambiguity sensitivity is about as strong as risk sensitivity. Springer 2018-03-19 Article PeerReviewed application/pdf en cc_by https://eprints.nottingham.ac.uk/50668/1/s11238-018-9657-9.pdf Cubitt, Robin, van de Kuilen, Gijs and Mukerji, Sujoy (2018) The strength of sensitivity to ambiguity. Theory and Decision . ISSN 1573-7187 Ambiguity sensitivity Ambiguity attitude Measuring strength of ambiguity sensitivity Smooth ambiguity model Ambiguity premium https://link.springer.com/article/10.1007/s11238-018-9657-9 doi:10.1007/s11238-018-9657-9 doi:10.1007/s11238-018-9657-9 |
| spellingShingle | Ambiguity sensitivity Ambiguity attitude Measuring strength of ambiguity sensitivity Smooth ambiguity model Ambiguity premium Cubitt, Robin van de Kuilen, Gijs Mukerji, Sujoy The strength of sensitivity to ambiguity |
| title | The strength of sensitivity to ambiguity |
| title_full | The strength of sensitivity to ambiguity |
| title_fullStr | The strength of sensitivity to ambiguity |
| title_full_unstemmed | The strength of sensitivity to ambiguity |
| title_short | The strength of sensitivity to ambiguity |
| title_sort | strength of sensitivity to ambiguity |
| topic | Ambiguity sensitivity Ambiguity attitude Measuring strength of ambiguity sensitivity Smooth ambiguity model Ambiguity premium |
| url | https://eprints.nottingham.ac.uk/50668/ https://eprints.nottingham.ac.uk/50668/ https://eprints.nottingham.ac.uk/50668/ |