Aggregating imprecise or conflicting beliefs: An experimental investigation using modern ambiguity theories

Baillon, A., Cabantous, L. & Wakker, P. P. (2012). Aggregating imprecise or conflicting beliefs: An experimental investigation using modern ambiguity theories. Journal of Risk and Uncertainty, 44(2), pp. 115-147. doi: 10.1007/s11166-012-9140-x

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Abstract

Two experiments show that violations of expected utility due to ambiguity, found in general decision experiments, also affect belief aggregation. Hence we use modern ambiguity theories to analyze belief aggregation, thus obtaining more refined and empirically more valid results than traditional theories can provide. We can now confirm more reliably that conflicting (heterogeneous) beliefs where some agents express certainty are processed differently than informationally equivalent imprecise homogeneous beliefs. We can also investigate new phenomena related to ambiguity. For instance, agents who express certainty receive extra weight (a cognitive effect related to ambiguity-generated insensitivity) and generate extra preference value (source preference; a motivational effect related to ambiguity aversion). Hence, incentive compatible belief elicitations that prevent manipulation are especially warranted when agents express certainty. For multiple prior theories of ambiguity, our findings imply that the same prior probabilities can be treated differently in different contexts, suggesting an interest of corresponding generalizations.

Item Type: Article
Additional Information: The final publication is available at Springer via http://dx.doi.org/10.1007/s11166-012-9140-x
Uncontrolled Keywords: Ambiguity, Conflicting sources of information, Source of uncertainty, Beliefs, Belief aggregation, Prospect theory
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
Divisions: Cass Business School > Faculty of Management
URI: http://openaccess.city.ac.uk/id/eprint/6926

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