Belief formation and belief updating under ambiguity : evidence from experiments
- Decisions under ambiguity depend on both the belief regarding possible scenarios and the attitude towards ambiguity. This paper exclusively investigates the belief formation and belief updating process under ambiguity, using laboratory experiments. The results show that half of the subjects tend to adopt a simple heuristic strategy when updating beliefs, while the other half seems to partially adopt the Bayesian updates. We recover beliefs, represented by distributions of the priors/posteriors. The recoverable initial priors mostly follow a uniform distribution. We also find that subjects on average demonstrate slight pessimism in an ambiguous environment.
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| Author: | Wenhui Li, Christian Wilde |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-504688 |
| URL: | https://ssrn.com/abstract=3399983 |
| Parent Title (English): | SAFE working paper series ; No. 251 |
| Series (Serial Number): | SAFE working paper (251) |
| Publisher: | SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2019 |
| Year of first Publication: | 2019 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2019/06/13 |
| Tag: | ambiguity; belief updates; laboratory experiments; learning strategy; non-Bayesian updates; pessimism |
| Issue: | Preliminary version June 2, 2019 |
| Page Number: | 56 |
| HeBIS-PPN: | 450472809 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / Institute for Law and Finance (ILF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
