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How certain is the uncertainty effect?

Published online by Cambridge University Press:  14 March 2025

Ondrej Rydval ,
Andreas Ortmann ,
Sasha Prokosheva  and
Ralph Hertwig
Ondrej Rydval
Affiliation:
Max Planck Institute of Economics, Jena, Germany CERGE-EI, Prague, Czech Republic
Andreas Ortmann*
Affiliation:
School of Economics, Australian School of Business, UNSW, Sydney, NSW 2052, Australia
Sasha Prokosheva
Affiliation:
CERGE-EI, Prague, Czech Republic Universidad Carlos III de Madrid, Madrid, Spain
Ralph Hertwig
Affiliation:
University of Basel, Basel, Switzerland
*
e-mail: [email protected]
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Abstract

We replicate three tasks for which Gneezy, List and Wu (Q. J. Econ. 121(4):1283—1309, 2006) document the so-called uncertainty effect: People value a binary lottery over non-monetary outcomes less than other people value the lottery's worse outcome. While the authors implement verbal lottery descriptions, we use a physical lottery format and also provide subjects with complete information about the goods they are to value. We observe for all three pricing tasks that subjects’ willingness to pay for the lottery is significantly higher than other subjects’ willingness to pay for the lottery's worse outcome.

Keywords

Decision making under riskFramingExperimentsTask ambiguity

JEL classification

C91: Laboratory, Individual Behavior C93: Field Experiments C81: Methodology for Collecting, Estimating, and Organizing Microeconomic Data • Data Access D83: Search • Learning • Information and Knowledge • Communication • Belief • Unawareness
Type
Research Article
Information
Experimental Economics , Volume 12 , Issue 4 , December 2009 , pp. 473 - 487
Copyright
Copyright © The Author(s) 2009

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