Task formats and ambiguity aversion

Abstract

This paper proposes that task format (choosing or rejecting) moderates the effect of ambiguity aversion. Specifically, an ambiguous option is more attractive in a choosing task than in a rejecting task compared with a risky option. The author performed three experiments to test the propositions. In the first experiment, participants showed less ambiguity aversion when they had to choose a preferred option (risky or ambiguous) compared with when they had to reject an option they preferred less. In the second experiment with a monetary incentive, participants had to form a cash-equivalent estimate for both a risky gamble and an ambiguous gamble in a traditional Ellsberg scenario. The ambiguous option emerged as more attractive than the risky option in the choosing task compared with the rejecting task. The third experiment showed that the participants' decision rationale mediated the effect of the task format on choice. These three experiments support the proposition that task formats moderate the effect of ambiguity aversion. On the basis of the findings, the author provides suggestions for practice and further research.

The effects of promotional package frames and price strategies on inaction inertia

“…In their design, the subjects indicated the smallest amount of money they would accept in exchange for an opportunity to play the lottery. Later studies on different topics, such as promotional frames (Liu & Chou, ) and risk and uncertainty (Curley, Yates, & Abrams, ; Liu, ; Yates & Zukowski, ), also applied incentive‐compatible designs and further modified the experimental procedure. In its current form, an incentive‐compatible design asks participants to indicate their WTP for a specific target or which option amongst two or more is most valuable to them, and it then gives the participants a chance to acquire it.…”