Ambiguity Attitudes about Investments: Evidence from the Field

dc.contributor.authorAnantanasuwong, Kanin
dc.contributor.authorKouwenberg, Roy
dc.contributor.authorMitchell, Olivia S
dc.contributor.authorPeijnenburg, Kim
dc.date2023-05-17T21:43:17.000
dc.date.accessioned2023-05-23T00:29:54Z
dc.date.available2023-05-23T00:29:54Z
dc.date.issued2019-02-07
dc.date.submitted2019-02-11T13:54:57-08:00
dc.description.abstractUsing an incentivized survey and a representative sample of investors, we elicit ambiguity attitudes toward a familiar company stock, a local stock index, a foreign stock index, and a crypto currency. We separately estimate ambiguity aversion (ambiguity preferences) and perceived ambiguity levels (perceptions about ambiguity), while controlling for unknown likelihood beliefs. We show that ambiguity aversion is highly correlated across different assets and can be summarized by a single underlying factor. By contrast, individuals’ perceived ambiguity levels differ depending on the type of asset and cannot be summarized by a single underlying factor. Perceived ambiguity is mitigated by financial literacy and education, while the preference component is correlated with risk aversion. Perceived ambiguity proves to be related to actual investment choices, validating our measure. Finally, our results imply that policies enhancing financial literacy and knowledge of financial markets can help stimulate equity market participation and reduce inequality, as these reduce peoples’ perceived levels of ambiguity about financial assets.
dc.description.comments<p>This project received funding from NETSPAR, Wharton School’s Pension Research Council/Boettner Center, and Labex Ecodex. The authors thank Stephen Dimmock and Peter Wakker for helpful comments. The content is solely the responsibility of the authors and does not represent the official views of the TIAA Institute, the Wharton School’s Pension Research Council/Boettner Center, or the individuals named above.</p>
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/43659
dc.legacy.articleid1025
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1025&amp;context=prc_papers&amp;unstamped=1
dc.source.issue25
dc.source.issueWP2019-02
dc.source.journalWharton Pension Research Council Working Papers
dc.source.statuspublished
dc.subject.classificationD81, C93, D14
dc.subject.otherAmbiguity
dc.subject.otherdecision-making under uncertainty
dc.subject.otherinvestment
dc.subject.otherpreferences
dc.subject.otherfinancial literacy
dc.subject.otherEconomics
dc.titleAmbiguity Attitudes about Investments: Evidence from the Field
dc.typeWorking Paper
digcom.contributor.authorAnantanasuwong, Kanin
digcom.contributor.authorKouwenberg, Roy
digcom.contributor.authorMitchell, Olivia S
digcom.contributor.authorPeijnenburg, Kim
digcom.identifierprc_papers/25
digcom.identifier.contextkey13800495
digcom.identifier.submissionpathprc_papers/25
digcom.typeworkingpaper
dspace.entity.typePublication
upenn.schoolDepartmentCenterWharton Pension Research Council Working Papers
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