Renowned journal Econometrica accepts paper by Aurélien Baillon and Chen Li

Erasmus School of Economics

Congratulations again to Professor Aurélien Baillon and Associate Professor Chen Li of Erasmus School of Economics and Professor Yoram Halevy (University of Toronto), on the acceptance of their paper Randomize at your own Risk: on the Observability of Ambiguity Aversion, by the world-renowned journal Econometrica.

Facing several decisions, people may consider each one in isolation or integrate them into a single optimisation problem. Isolation and integration may yield different choices, for instance, if uncertainty is involved, and only one randomly selected decision is implemented. The researchers investigate whether the random incentive system in experiments that measure ambiguity aversion provides a hedge against ambiguity, making ambiguity-averse subjects who integrate behave as if they were ambiguity neutral. Their results suggest that about half of the ambiguity averse subjects integrated their choices in the experiment into a single problem, whereas the other half isolated. Their design further enables us to disentangle properties of the integrating subjects' preferences over compound objects induced by the random incentive system and the choice problems in the experiment.

About the researchers

Aurelien Baillon is Professor of Economics of Uncertainty in the department of Applied Economics.  His work focuses on individual decision making under risk and ambiguity. Through both empirical and theoretical studies, his research addresses issues in subjective probability elicitation, models of attitude towards risk and ambiguity, and aggregation of expert opinions. Chen Li is Associate Professor in Behavioural Economics at Erasmus School of Economics. Chen focuses on decision making under uncertainty and over time. Her research addresses questions such as whether the poor are more averse to ambiguity, how learning affect people's ambiguity attitudes, and how people's beliefs and attitudes towards uncertainty affect their decisions in social interactions. Yoram Halevy is Professor of Economics and Director of the Toronto Experimental Economics Lab (TEEL) at the Department of Economics, University of Toronto. His research interests are individual and strategic decision making, which he studies using theoretical and experimental tools. He is particularly interested in what constitutes “rational” behaviour and investigating how (bounded) rationality can be revealed in various environments.

About Econometrica

Established in 1933, Econometrica is a top-rated peer-reviewed academic journal of economics, published by Wiley-Blackwell on behalf of the Econometric Society. Econometrica publishes original articles in all branches of economics - theoretical and empirical, abstract and applied, providing wide-ranging coverage across the subject area.

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For the full paper, click here.

For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, mobile phone: +31 6 53 641 846.

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