title: Hedging and Ambiguity
creator: Oechssler, Jörg
creator: Rau, Hannes
creator: Roomets, Alex
subject: ddc-330
subject: 330 Economics
description: We run an experiment that gives subjects the opportunity to hedge away ambiguity in an Ellsberg-style experiment. Subjects are asked to make two bets on the same draw from an ambiguous urn, with a coin flip deciding which bet is paid. By modifying the timing of the draw, coin flip, and decision, we are able to test the reversal-of-order axiom, particularly as it relates to the ability of the Random-Lottery Incentive System (RLIS) to prevent cross-task contamination in an ambiguity setting. We find that we  cannot reject that the reversal-of-order axiom holds. This suggests that hedging could still be possible when carefully implementing RLIS. However, we also find low levels of ambiguity hedging across the board, suggesting the existence of the hedging possibility does not necessarily represent a common problem in ambiguity experiments.
date: 2016-11
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/22160/1/oechssler_rau_roomets_2016_dp621.pdf
identifier: DOI:10.11588/heidok.00022160
identifier: urn:nbn:de:bsz:16-heidok-221603
identifier:   Oechssler, Jörg ; Rau, Hannes ; Roomets, Alex  (2016) Hedging and Ambiguity.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/22160/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng