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Essays on Experimental Analysis of Decision-Making under Risk and Ambiguity

Ortiz De Zarate Pina, Julen Carlos; (2021) Essays on Experimental Analysis of Decision-Making under Risk and Ambiguity. Doctoral thesis (Ph.D), UCL (University College London). Green open access

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Abstract

This thesis contributes to the experimental literature on decision-making under risk and ambiguity. In chapters 1 and 2, I study how environments of increased uncertainty, which I model as increased uncertainty about the probability of an event occurring (i.e., ambiguity), affect the decision-making process, in two settings: in chapter 1, I focus on how this increased uncertainty influences preferences over the timing of resolution of uncertainty. The results of the experiment show that in a lottery choice problem, as the ex-ante likelihood of the good outcome occurring goes up, participants turn from wanting to receive partial information before the resolution of uncertainty to being averse to it. This result has important theoretical and applied implications. In chapter 2, I analyse how social identity (e.g., political ideas, gender, ethnicity) and the stereotypical decisions made by people in the same social group are used as a reference point by decision-makers when making uncertain decisions. I find that increased uncertainty makes participants in the experiment more likely to choose the same decision as the majority of participants that belong to their social group, especially participants who do not feel a strong identification with the group. In chapter 3, my co-authors and I look at how a global social and economic shock (namely, the COVID-19 pandemic) affects risk preferences in a sample of students and professional traders. We find no significant effect of the crisis on these preferences. This result gives support to standard economic theory, which considers these preferences to be stable. We also study if the crisis affects personality traits that are economically relevant, such as trust or locus of control. We find that some of these traits do change during the pandemic. The effect, however, is heterogeneous across samples of traders and students.

Type: Thesis (Doctoral)
Qualification: Ph.D
Title: Essays on Experimental Analysis of Decision-Making under Risk and Ambiguity
Event: UCL
Open access status: An open access version is available from UCL Discovery
Language: English
Additional information: Copyright © The Author 2021. Original content in this thesis is licensed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) Licence (https://creativecommons.org/licenses/by-nc-nd/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10134189
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