Comparing Ambiguous Urns with Different Sizes

48 Pages Posted: 12 Jun 2018 Last revised: 21 Aug 2020

See all articles by Emel Filiz-Ozbay

Emel Filiz-Ozbay

University of Maryland - College Park

Huseyin Gulen

Purdue University - Krannert School of Management

Yusufcan Masatlioglu

University of Michigan

Erkut Ozbay

University of Maryland - Department of Economics

Date Written: July 27, 2020

Abstract

We investigate experimentally preferences between different ambiguous processes generated by two-color Ellsberg urns. By providing symmetric information on urns with different numbers of beads and keeping the information on the most optimistic, pessimistic, and equal probability of winning possibilities the same, we elicit subjects' preferences for the size of an ambiguous urn. Subjects prefer the bets from the ambiguous urns with more beads. We analyze the role of ambiguity aversion and ratio bias of subjects in this behavior. We study the restrictions that our findings impose on the existing ambiguity models.

Keywords: Ambiguity, Risk, Ratio Bias, Ellsberg's Experiment

JEL Classification: D01, D03, D80, D81

Suggested Citation

Filiz-Ozbay, Emel and Gulen, Huseyin and Masatlioglu, Yusufcan and Ozbay, Erkut, Comparing Ambiguous Urns with Different Sizes (July 27, 2020). Available at SSRN: https://ssrn.com/abstract=3183973 or http://dx.doi.org/10.2139/ssrn.3183973

Emel Filiz-Ozbay (Contact Author)

University of Maryland - College Park ( email )

College Park, MD 20742
United States

Huseyin Gulen

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Yusufcan Masatlioglu

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Erkut Ozbay

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

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