PhD Lunch Seminars Rotterdam

Chen Li (EUR)

Although psychological and economic evidence supporting the existence of sources of uncertainty abounds, most of them adopted a static perspective by comparing different sources at a fixed point in time. This paper took a dynamic perspective and the formation and evolution of source is the result of learning of new information. We ran an experiment in which subjects receive new information about sources. By adopting a new elicitation method that allowed us to separate change of belief from change of attitude, we studied the evolution of their attitude towards ambiguity. Our findings show that, new information increased subjects’ sensitivity to changes in likelihood but their (dis)like of the source (ambiguity aversion) was unaffected. Sensitivity to likelihood is often considered a cognitive component of people’s ambiguity attitude, while ambiguity aversion is considered as a motivational component. Our findings suggest that, through learning of information, subjects became more competent in distinguishing the difference between different likelihoods, implying a cognitive improvement.