Trust as a decision under ambiguity

Li, Chen C.; Turmunkh, Uyanga; Wakker, Peter P.

doi:10.1007/s10683-018-9582-3

Cited by 56 publications

(29 citation statements)

References 93 publications

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“…Her sample of Chinese adolescents had an exceptional spread in wealth, allowing for a good measurement of wealth dependence of ambiguity attitudes. Li, Turmunk, and Wakker ( ) used our method to measure the impact of ambiguity attitudes in strategic situations.…”

Section: Discussionmentioning

confidence: 99%

Measuring Ambiguity Attitudes for All (Natural) Events

Baillon¹,

Huang²,

Selim³

et al. 2018

Econometrica

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109

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Measurements of ambiguity attitudes have so far focused on artificial events, where (subjective) beliefs can be derived from symmetry of events and can be then controlled for. For natural events as relevant in applications, such a symmetry and corresponding control are usually absent, precluding traditional measurement methods. This paper introduces two indexes of ambiguity attitudes, one for aversion and the other for insensitivity/perception, for which we can control for likelihood beliefs even if these are unknown. Hence, we can now measure ambiguity attitudes for natural events. Our indexes are valid under many ambiguity theories, do not require expected utility for risk, and are easy to elicit in practice. We use our indexes to investigate time pressure under ambiguity. People do not become more ambiguity averse under time pressure but become more insensitive (perceive more ambiguity). These findings are plausible and, hence, support the validity of our indexes.

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Section: Discussionmentioning

confidence: 99%

Measuring Ambiguity Attitudes for All (Natural) Events

Baillon¹,

Huang²,

Selim³

et al. 2018

Econometrica

Self Cite

109

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show abstract

“…1, it is therefore sufficient to elicit the 1st mover's matching probabilities m A , m B , and m C of the three single events A, B, and C corresponding to the three possible acts of the 2nd mover, together with the matching probabilities m A B , m AC , and m BC of the three composite events ( A or B), ( A or C ), and (B or C ). For a detailed discussion of how such ambiguity attitudes can be measured in strategic games without disturbing the game, see Li et al (2019). For analyses using traditional ambiguity-neutral beliefs, see Perea (2012).…”

Section: Measuring Ambiguity Attitudesmentioning

confidence: 99%

“…For individual decisions, Baillon et al (2018) introduced a method that can measure ambiguity attitudes for general events, so that applicationrelevant events can be used, increasing external validity and subjects' motivations. Li et al (2019) extended this method to game theory and applied it to trust games. They showed empirically that ambiguity attitudes play a role there and that ambiguity aversion reduces trust.…”

Section: Introductionmentioning

confidence: 99%

Social and strategic ambiguity versus betrayal aversion

Turmunkh

Wakker

2020

Games and Economic Behavior

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This paper examines the difference between strategic ambiguity as in game theory and ambiguity arising in individual decisions. We identify a new, non-strategic component underlying all strategic ambiguities, called social ambiguity. We recommend controlling for it to better identify strategic causes. Thus, we shed new light on Bohnet and Zeckhauser's betrayal aversion in the trust game. We first show theoretically that, contrary to preceding claims in the literature, ambiguity attitudes can play a role here. We then show experimentally that social ambiguity, rather than betrayal aversion, can explain our empirical findings. Using our new control, we identify the unique effect of strategic ambiguity. Strategic complexity increases ambiguity perception and thus increases people's likelihood insensitivity when making decisions under strategic ambiguity. Our results show the usefulness of controlling for ambiguity attitudes before speculating on strategic factors.

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“…Many discussed the expected utility, such as [39][40][41][42][43][44][45], and [46] examined the conditional expected utility. Others discussed ambiguity [47][48][49][50][51][52][53]. Wakker and Yang [54] analyzed the concave/convex utility and weighting functions.…”

Section: Introduction: the Decision Analysis Process Under Uncertaintymentioning

confidence: 99%

Seismic risk mitigation in buildings using a new method to encode a joint weighting function in multi-attribute utility theory

Makhoul

2019

SN Appl. Sci.

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This paper provides a new simple, nonparametric method that directly elicits a joint weighting function to be immediately associated with multi-attribute utility under uncertainty. The method allows to include the subjective perception of probabilities and consequences in the decision-making process while dealing with multi-attributes. The concept was only possible when dealing with one outcome; this study demonstrates that it can be achieved for multiple outcomes by mean of a parametric method. First, the newly proposed procedure is described. Then, the experimental protocol is presented while applied to the performance-based earthquake engineering (PBEE) methodology. The decision-making process of PBEE is improved by including the preferences of the decision maker, which is usually the owner. This improvement is important, especially in seismic risk mitigation, because the problem involves low probabilities, which may be inaccurately estimated or even unknown, and these are coupled with catastrophic events. Such combined factors, when objectively weighed, lead to decisions counter to the distorted perception of probabilities and consequences that reflect the implicit desires of the decision maker. Using the newly proposed method, the owner, whose own preferences are elicited, is more likely to embrace the solution since he is involved in the decision process. The results and implications of the analysis are discussed showing the difference in results while including the joint weighting function in the decision-making procedure. The method, which is a step forward in multi-attribute utility theory, is not restricted to the decision-making process applied to PBEE but can be implemented to any multi-attribute decision analysis problem.

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Trust as a decision under ambiguity

Cited by 56 publications

References 93 publications

Measuring Ambiguity Attitudes for All (Natural) Events

Measuring Ambiguity Attitudes for All (Natural) Events

Social and strategic ambiguity versus betrayal aversion

Seismic risk mitigation in buildings using a new method to encode a joint weighting function in multi-attribute utility theory

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