The effect of ambiguity in strategic environments: an experiment

Theory-Experimental Seminar

Antonio Cabrales

Universidad Carlos III de Madrid

28-Feb-2022

seminar – 14:30

We experimentally study an environment in which success requires a sufficient total contribution by members of a group. There are significant, and badly defined (ambiguous) uncertainties surrounding the chance of success and the total effort required to obtain it. We have a large representative sample of the Spanish population (1500 participants). A theoretical model with min-max preferences towards ambiguity and no strategic uncertainty predicts higher contributions in the ambiguous environments. However, we find that the ATE of ambiguity on contributions is zero (and the sample is large enough to have high power). We also find that both risk and ambiguity aversion significantly decrease contributions (and both dimensions of preferences are correlated, although not perfectly so). There are no significant interaction effects with the personal characteristics of the participant