Asymmetric impact of competitive and cooperative environments on decisions involving ambiguity.

Sule Guney
Wednesday, August 5, 2015 - 14:00
RTH 306

Ambiguity aversion refers to a pattern of preferences favoring options with known winning probabilities (i.e. risky) over those with unknown winning probabilities (i.e. ambiguous), even though normative theories imply indifference. In a couple of studies, we aimed to explore how different strategic environments influence people’s beliefs about winning probabilities and hence their decisions under ambiguity. To do so, we changed the structure of the classic Ellsberg task into a two-player interactive game where the decision-making environment was explicitly made Cooperative (i.e., players’ financial interests were aligned), Competitive (players’ financial interests were opposite), or Non-Competitive (players’ financial interests were independent). In the study, two players were presented with a risky box (50 black and 50 yellow balls), and an ambiguous box (100 black and yellows balls in an unknown proportion); and asked to bet on a color to be drawn from their chosen box. To make the Ellsberg task interactive, one of the players was allowed to arrange the ambiguous box before the box/color choice stage, even though the exact proportion of colored balls remained unknown to both players. The highest level of ambiguity aversion was obtained in the Competitive condition, and the lowest in the Cooperative condition, with the Non-Competitive condition in between. Also, ambiguity attitudes were sensitive to who was in charge of box arrangement in the Competitive condition, but not in the Cooperative condition. Overall our findings indicate that the perceived competitiveness and cooperativeness of the decision-making environment alter attitudes toward ambiguity in opposing directions.

Bio: Sule Guney is a post-doctoral research associate at the U.S. Homeland Security Center for Risk and Economic Analysis of Terrorism Events (CREATE). She received her Ph.D. in Cognitive Psychology from University of New South Wales, Australia. Her primary area of interest is decision-making, with a specific focus on understanding how people make (i) individual decisions in the face of ambiguity and risk, and (ii) strategic decisions in interactive environments both in laboratory and real-life settings. She has publications on decision-making under ambiguity and in strategic games in top field journals, including Journal of Behavioral Decision Making, Behavioral and Brain Sciences, and Frontiers in Human Neuroscience. Using her expertise in behavioral and experimental techniques in the area of decision-making, she is currently working on various projects at CREATE, and studying decisions from a decision-analytic perspective, both in terrorism and non-terrorism contexts.