Background Uncertainty Can Increase Risk Aversion in Decision Making

Abstract

Here, we aim to investigate the effect of background uncertainty on decision making systematically. After reviewing the existing empirical studies, we argue that two types of uncertainty should be distinguished: a) ambiguity, i.e., uncertain outcomes without probability information, and b) risk, i.e., uncertainties involving probabilities regarding a negative outcome. We test the hypothesis that the type of uncertainty moderates the effect of background uncertainty on risk preferences. To test our hypothesis, we conducted four experimental studies. In this project we host all analyses scripts, data and linked preregistration of Study 3 and Study 4.