Template-Type: ReDIF-Paper 1.0
Author-Name:  Jonathan E. Alevy
Author-Name-First: Jonathan 
Author-Name-Last: Alevy
Author-Email:  afja@uaa.alaska.edu 
Author-Workplace-Name: Department of Economics, University of  Alaska Anchorage 
Title: Ambiguity in Individual Choice and Market Environments: On the Importance of Comparative Ignorance
Abstract: After Ellsberg’s thought experiments brought focus to the relevance of missing
information for choice, extensive efforts have been made to understand ambiguity theoretically
and empirically (Ellsberg 1961). Fox and Tversky (1995) make an important contribution to
understanding behavioral responses to ambiguity. In an individual choice setting they
demonstrate that an aversion to ambiguous lotteries arises only when a comparison to
unambiguous lotteries is available. The current study advances this literature by exploring the
importance of Fox and Tversky’s finding for market outcomes and finds support for their
Comparative Ignorance Hypothesis in the market setting.   
Creation-date: 2011
File-URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201104.pdf
File-Format: Application/pdf
Classification-JEL: C91, C92, D81, G12 
Keywords: ambiguity, asset market experiment, comparitive ignorance 
Number: 2011-04
Handle: RePEc:ala:wpaper:2011-04