Climate Change Catastrophes and Insuring Decisions: A Study in the Presence of Ambiguity
2020, Journal of Economic Behavior & Organization,
Vol 180, pp 992-1002. (available online here)
There has been very little research to test whether ambiguity affects individuals' decisions to insure themselves against the catastrophic effects of climate change. This paper attempts to study how individuals respond to the availability of an insurance that would safeguard their interests if a climate change catastrophe occurred. If such an insurance is available to them, do individuals insure themselves sufficiently? Further, the study investigates if information regarding the past occurrence of the catastrophic event leads to an increase in insurance subscriptions and/or the emergence of a lemons market. Finally, policy implications are investigated - Can an indirect intervention in the form of a "nudge" ensure a better outcome?
2020, Journal of Economic Behavior & Organization,
Vol 180, pp 992-1002. (available online here)
There has been very little research to test whether ambiguity affects individuals' decisions to insure themselves against the catastrophic effects of climate change. This paper attempts to study how individuals respond to the availability of an insurance that would safeguard their interests if a climate change catastrophe occurred. If such an insurance is available to them, do individuals insure themselves sufficiently? Further, the study investigates if information regarding the past occurrence of the catastrophic event leads to an increase in insurance subscriptions and/or the emergence of a lemons market. Finally, policy implications are investigated - Can an indirect intervention in the form of a "nudge" ensure a better outcome?
Strategic Ambiguity and Decision-making: An Experimental Study
with David Kelsey, 2018, Theory and Decision,
Vol 84, Issue 3, pp 387-404.
We conducted a set of experiments to compare the effect of ambiguity in single person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We and that ambiguity has the opposite effect in games of strategic substitutes and complements. This confirms a theoretical prediction made by Eichberger and Kelsey (2002). In addition, we note that subjects' ambiguity attitudes appear to be context dependent: ambiguity-loving in single person decisions and ambiguity-averse in games. This is consistent with the findings of Kelsey and le Roux (2015).
with David Kelsey, 2018, Theory and Decision,
Vol 84, Issue 3, pp 387-404.
We conducted a set of experiments to compare the effect of ambiguity in single person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We and that ambiguity has the opposite effect in games of strategic substitutes and complements. This confirms a theoretical prediction made by Eichberger and Kelsey (2002). In addition, we note that subjects' ambiguity attitudes appear to be context dependent: ambiguity-loving in single person decisions and ambiguity-averse in games. This is consistent with the findings of Kelsey and le Roux (2015).
Dragon Slaying with Ambiguity: Theory and Experiments
with David Kelsey, 2017, Journal of Public Economic Theory,
Vol 19, Issue 1, pp 178-197. (available here)
This paper studies the impact of ambiguity in the best shot and weakest link models of public good provision. The models are first analysed theoretically. Then we conduct experiments to study how ambiguity affects behaviour in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity safe strategy, is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behaviour in games. Subjects tend to choose contributions above (resp. below) the Nash equilibrium in the Best Shot (resp. Weakest Link) model.
with David Kelsey, 2017, Journal of Public Economic Theory,
Vol 19, Issue 1, pp 178-197. (available here)
This paper studies the impact of ambiguity in the best shot and weakest link models of public good provision. The models are first analysed theoretically. Then we conduct experiments to study how ambiguity affects behaviour in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity safe strategy, is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behaviour in games. Subjects tend to choose contributions above (resp. below) the Nash equilibrium in the Best Shot (resp. Weakest Link) model.
An Experimental Study on the Effect of Ambiguity in a Coordination Game
with David Kelsey, 2015, Theory and Decision,
Vol 79, Issue 4, pp 667-688. (available online here)
We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity safe option. We find that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity aversion influences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.
with David Kelsey, 2015, Theory and Decision,
Vol 79, Issue 4, pp 667-688. (available online here)
We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity safe option. We find that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity aversion influences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.
Deviations from Equilibrium in an Experiment on Signaling Games: First Results
with Dieter Balkenborg, 2010, The Selten School of Behavioural Economics, Springer 1st Edition, 2010, XV, pp 73-87.
In this paper we provide a summary of results concerning two series of experiments we ran based on a modified signalling game. The game for the initial experiment was selected by Reinhard Selten. It has the interesting property that the strategically stable outcome (Kohlberg and Mertens 1986) does not coincide with the outcome of the Harsanyi-Selten solution (1988). However, it is a complex game insofar as standard refinement concepts like the intuitive criterion, or the never-a-weak-best-response criterion, do not help to refine among the equilibria. The second motive for the design was to analyse, how the change in the reward at a particular terminal node would affect behaviour.
with Dieter Balkenborg, 2010, The Selten School of Behavioural Economics, Springer 1st Edition, 2010, XV, pp 73-87.
In this paper we provide a summary of results concerning two series of experiments we ran based on a modified signalling game. The game for the initial experiment was selected by Reinhard Selten. It has the interesting property that the strategically stable outcome (Kohlberg and Mertens 1986) does not coincide with the outcome of the Harsanyi-Selten solution (1988). However, it is a complex game insofar as standard refinement concepts like the intuitive criterion, or the never-a-weak-best-response criterion, do not help to refine among the equilibria. The second motive for the design was to analyse, how the change in the reward at a particular terminal node would affect behaviour.