Research & Publications

Journal Articles

Career Concerns and Ambiguity Aversion

2010, Economics Letters

Eric Bennett Rasmusen

Abstract

Why do people have ambiguity aversion, preferring, a gamble with a 50% chance of success to one whose expected probability of success is 50% but where that 50% is an unbiased estimate? The answer modelled here, in the spirit of the career concerns literature, is learning: a risk-averse person does not wish observers to learn whether he is good or bad at estimating probabilities. He therefore prefers a gamble with objective probabilities.

Citation

Rasmusen, Eric Bennett  (2010), "Career Concerns and Ambiguity Aversion," Economics Letters, Vol.108, No. 2, August, 175-177. 

Keywords

ambiguity, Ellsberg paradox, career concerns