Comparing decisions under compound risk and ambiguity: the importance of cognitive skills

0468780 - NHU-C 2017 RIV US eng J - Journal Article
Prokosheva, Sasha
Comparing decisions under compound risk and ambiguity: the importance of cognitive skills.
Journal of Behavioral and Experimental Economics. Roč. 64, October (2016), s. 94-105. ISSN 2214-8043. E-ISSN 2214-8051
Institutional support: PRVOUK-P23
Keywords : cognitive ability * reduction of compound lotteries
Subject RIV: AH - Economics
Impact factor: 0.809, year: 2016

I investigate the relationship between attitudes towards ambiguity and the ability to reduce compound risks. The evidence from an experiment on adolescents shows that patterns identified in the previous literature are susceptible to experimental implementation and the characteristics of the subjects. Cognitive skills and the way lotteries are presented affect reduction of compound risks differently to ambiguity neutrality. My results suggest that theoretical studies which model ambiguity preferences by relaxing the assumption of compound risk reduction should be viewed with caution, and I add to the evidence against the use of compound lotteries to represent ambiguous environments in experiments.
Permanent Link: http://hdl.handle.net/11104/0266606