eprintid: 22160
rev_number: 16
eprint_status: archive
userid: 2744
dir: disk0/00/02/21/60
datestamp: 2016-11-11 08:25:53
lastmod: 2016-11-18 10:08:27
status_changed: 2016-11-11 08:25:53
type: workingPaper
metadata_visibility: show
creators_name: Oechssler, Jörg
creators_name: Rau, Hannes
creators_name: Roomets, Alex
title: Hedging and Ambiguity
subjects: 330
divisions: 181000
keywords: Ellsberg paradox, hedging, reversal of order axiom, experiment.
abstract: 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
id_scheme: DOI
id_number: 10.11588/heidok.00022160
schriftenreihe_cluster_id: sr-3
schriftenreihe_order: 0621
ppn_swb: 881618195
own_urn: urn:nbn:de:bsz:16-heidok-221603
language: eng
bibsort: OECHSSLERJHEDGINGAND201611
full_text_status: public
series: Discussion Paper Series, University of Heidelberg, Department of Economics
volume: 0621
place_of_pub: Heidelberg
pages: 14
citation:   Oechssler, Jörg ; Rau, Hannes ; Roomets, Alex  (2016) Hedging and Ambiguity.  [Working paper]     
document_url: https://archiv.ub.uni-heidelberg.de/volltextserver/22160/1/oechssler_rau_roomets_2016_dp621.pdf