Preferences for the resolution of risk and ambiguity

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Authors: Alexander L. Brown, Huiyi Guo, Hyundam Je
Cited by: 0
References: 51

Abstract

Generalized recursive utility models often imply that agents have a preference over the timing of uncertainty resolution. Laboratory elicitations of subjects’ preferences generally provide direct evidence in support of this implication, but only in the domain of risk. We provide the first experimental examination of uncertainty resolution with respect to ambiguity, in addition to risk. The modal subject exhibits a preference for both early resolution of risk and ambiguity, but with only a minimal willingness to pay to realize either over late resolution. While preferences in both domains are positively correlated, the strength of that correlation varies based on ambiguity attitudes. Among ten commonly used representative recursive utility models, we identify the models that most efficiently explain observed subject preferences under two alternative assumptions: treating a subject’s token willingness to pay as either a true preference or indifference.

Fields of Study & Subjects

Decision-Making and Behavioral Economics Experimental Behavioral Economics Studies Economic and Environmental Valuation

Publication details

Journal / source
Journal of Economic Theory
Volume
232
Pages
106151–106151
Publication date
16 February 2026
Language
EN