Attitudes to Uncertainty in a Strategic Setting

18 Pages Posted: 25 May 2017

See all articles by Zhihua Li

Zhihua Li

University of Birmingham

Graham Loomes

University of Warwick

Ganna Pogrebna

Columbia University

Date Written: May 2017

Abstract

Much uncertainty in life relates to the behaviour of others in interactive environments. This article tests some implications of subjective expected utility theory (Savage, 1954) in an experimental strategic setting where there is uncertainty about the actions of other players. In this environment, a large majority of our participants violate subjective expected utility theory. However, they do not exhibit the sorts of consistent ‘attitude to ambiguity’ found in individual decision experiments. We discuss three possible explanations of their behaviour: non‐linear transformation of probabilities; noise in responses; and/or systematic biases in the way that individuals generate subjective probabilities.

Suggested Citation

Li, Zhihua and Loomes, Graham and Pogrebna, Ganna, Attitudes to Uncertainty in a Strategic Setting (May 2017). The Economic Journal, Vol. 127, Issue 601, pp. 809-826, 2017. Available at SSRN: https://ssrn.com/abstract=2973607 or http://dx.doi.org/10.1111/ecoj.12486

Zhihua Li

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Graham Loomes (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Ganna Pogrebna

Columbia University ( email )

419 Schermerhorn Hall
New York, NY 10027
United States

HOME PAGE: http://www.gannapogrebna.com

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
122
PlumX Metrics