Ambiguity Seeking as a Result of the Status Quo Bias
34 Pages Posted: 15 Nov 2005
Date Written: September 1, 2005
Several factors affect attitudes toward ambiguity. What happens, however, when people are asked to exchange an ambiguous alternative in their possession for an unambiguous one? We present three experiments in which individuals preferred to retain the former. This status quo bias emerged both within- and between-subjects, with and without incentives, with different outcome distributions, and with endowments determined by both the experimenter and the participants themselves. Findings emphasize the need to account for the frames of reference under which evaluations of probabilistic information take place as well as modifications that should be incorporated into descriptive models of decision making.
Keywords: Ambiguity, risk, status quo bias, decision making, uncertainty
JEL Classification: C91, D81
Suggested Citation: Suggested Citation