Ambiguity attitudes toward natural and artificial sources in gain and loss domains

Abstract

AbstractIn this study, we compare ambiguity attitudes—ambiguity aversion and ambiguity-generated insensitivity (a-insensitivity)—toward natural and artificial sources of ambiguity in gain and loss domains with the participation of individuals with various attributes. In our experiment, we use precipitation during the rainy season as a natural source of ambiguity and the Ellsberg-type box as an artificial source. We find that people are more a-insensitive toward the natural source than the artificial source, even though the outcomes are identical. Additionally, people with low cognitive reflection ability are more a-insensitive than those with high cognitive reflection ability. Thus, people with low cognitive reflection ability have more difficulty in identifying likelihood under ambiguity and tend to view the likelihood of all uncertain events to be equal. Furthermore, we examine the relationships between ambiguity attitudes and real-world behaviors with regard to flood preparedness. In the group with high cognitive reflection ability, people with higher a-insensitivity are less likely to adopt flood preparedness behaviors in the gain domain of the natural source. However, we do not find any relationship between ambiguity attitudes and flood preparedness behaviors in the artificial source. Thus, applying ambiguity attitudes toward natural sources is worth considering when explaining real-world behaviors based on ambiguity attitudes.