Paper #882

Title:

Ambiguity seeking as a result of the status quo bias

Authors:

Mercè Roca, Robin Hogarth and A. John Maule

Date:

September 2005 (Revised: June 2006)

Abstract:

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, Leex

JEL codes:

C91, D81

Area of Research:

Behavioral and Experimental Economics

Published in:

Journal of Risk and Uncertainty, Volume 32, Number 3, May 2006, pp. 175-194

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