Risk Attitude, Ambiguity Intolerance and Decision Making: An Exploratory Investigation*

Ghosh, Dipankar; Ray, Manash R.

doi:10.1111/j.1540-5915.1992.tb00398.x

Cited by 49 publications

(24 citation statements)

References 34 publications

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“…To compound the issue, few researchers have examined whether or not risk and uncertainty are distinct constructs (e.g., Ghosh & Ray, 1992, 1997. Untangling the confusion between the two constructs and integrating them into an appropriate decisionmaking model would be helpful in assessing their influences on people's travel behavior.…”

Section: Introductionmentioning

confidence: 98%

Risk, uncertainty and the theory of planned behavior: A tourism example

2010

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Section: Introductionmentioning

confidence: 98%

Risk, uncertainty and the theory of planned behavior: A tourism example

2010

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“…Prior research has shown that whether the actual outcomes are seen as good or bad may affect managers' attitude toward taking risks 2 (Kahneman and Tversky, 1979) and their attitude toward ambiguity (Kahn and Sarin, 1988;Ghosh and Ray, 1992). Similarly, whether variances are above or below the interval benchmark may also affect managers' attitude toward ambiguity and their risk attitude.…”

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confidence: 95%

Managers' variance investigation decisions: an experimental examination of probabilistic and outcome ambiguity

Keller

Keltyka

2001

Behavioral Decision Making

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Information ambiguity is prevalent in organizations and may in¯uence management decisions. This study examines, given imprecise probabilities or outcomes, how managers decide which department's performance to investigate further when they are provided with performance benchmarks expressed in numerical intervals. Seventy-nine MBA students participated in two experiments involving investigation decisions. We presented participants with interval benchmarks of a ®rm's expenses. Being below or above the benchmark should have been seen as equally negative. We found that, when facing outcome ambiguity, our participants consistently preferred to investigate further those departments whose performance was described as having an ambiguous outcome (when the outcome's range was centered either below or above the interval benchmark). However, when facing probabilistic ambiguity, there were two predominant choice patterns: consistently choosing to investigate the department whose performance is described with an ambiguous probability, or consistently choosing to investigate the department with unambiguous performance. To gain further insight, we conducted a follow-up study collecting written protocols of participants' reasons for making choices involving ambiguous performance information. The results show that our participants displayed similar decision-making processes when facing outcome ambiguity and probabilistic ambiguity.

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“…Finally, this research explores the link between a psychological measure of "intolerance of ambiguity" and the conventional economic measure. Sherman (1974), as well as Gosh and Ray (1992) for instance, found a modest correlation between Budner's psychological scale of "Intolerance of Ambiguity" and ambiguity aversion. Table I below summaries the predictions regarding insurers behaviours.…”

Section: Introductionmentioning

confidence: 99%

Ambiguity Aversion in the Field of Insurance: Insurers’ Attitude to Imprecise and Conflicting Probability Estimates

Cabantous

2007

Theor Decis

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ABSTRACT. This article presents the results of a survey designed to test, with economically sophisticated participants, Ellsberg's ambiguity aversion hypothesis, and Smithson's conflict aversion hypothesis. Based on an original sample of 78 professional actuaries (all members of the French Institute of Actuaries), this article provides empirical evidence that ambiguity (i.e. uncertainty about the probability) affect insurers' decision on pricing insurance. It first reveals that premiums are significantly higher for risks when there is ambiguity regarding the probability of the loss. Second, it shows that insurers are sensitive to sources of ambiguity. The participants indeed, charged a higher premium when ambiguity came from conflict and disagreement regarding the probability of the loss than when ambiguity came from imprecision (imprecise forecast about the probability of the loss). This research thus documents the presence of both ambiguity aversion and conflict aversion in the field of insurance, and discuses economic and psychological rationales for the observed behaviours.

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Risk Attitude, Ambiguity Intolerance and Decision Making: An Exploratory Investigation*

Cited by 49 publications

References 34 publications

Risk, uncertainty and the theory of planned behavior: A tourism example

Risk, uncertainty and the theory of planned behavior: A tourism example

Managers' variance investigation decisions: an experimental examination of probabilistic and outcome ambiguity

Ambiguity Aversion in the Field of Insurance: Insurers’ Attitude to Imprecise and Conflicting Probability Estimates

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