Risk, ambiguity, and diversification
| Data(s) |
11/03/2016
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| Resumo |
Attitudes toward risk influence the decision to diversify among uncertain options. Yet, because in most situations the options are ambiguous, attitudes toward ambiguity may also play an important role. I conduct a laboratory experiment to investigate the effect of ambiguity on the decision to diversify. I find that diversification is more prevalent and more persistent under ambiguity than under risk. Moreover, excess diversification under ambiguity is driven by participants who stick with a status quo gamble when diversification among gambles is not feasible. This behavioral pattern cannot be accommodated by major theories of choice under ambiguity. |
| Formato |
application/pdf |
| Identificador | |
| Publicador |
Facultad de Economía |
| Relação |
https://ideas.repec.org/p/col/000092/014588.html |
| Direitos |
info:eu-repo/semantics/openAccess |
| Fonte |
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| Palavras-Chave | #Economía #Inercia -- Aspectos económicos #Diversificación -- Aspectos económicos #330 #risk, ambiguity #inertia #diversification #reference-dependent preferences #indecisiveness #ambiguity aversion |
| Tipo |
info:eu-repo/semantics/workingPaper info:eu-repo/semantics/publishedVersion |
