Measuring selection effects on attitudes toward uncertainty: Experimental Evidence

In this paper, we address three issues on measuring attitudes toward uncertainty using 206 Bangladeshi farmers in a field experiment. Using a slightly modified version of the original multiple price list (MPL) approach of Holt and Laury (2002), we first measure farmers’ risk and ambiguity aversions when subjects make decision alone. Secondly, for risk experiments only, we investigate the subjects’ attitudes toward uncertainty with different winning probabilities (p=0.3, 0.5, and 0.7) as probabilities of winning are unknown for ambiguity experiments. We conduct each experiment on both gain and loss domains to address the gain-loss asymmetry in attitudes toward uncertainty. Finally, we attempt to investigate the effects of communications on individuals’ attitudes toward uncertainty. In order to do so, we conduct all these variations of experiments allowing farmers to make decisions in groups of three. In order to measure group selection effects on attitudes toward uncertainty we allow fifty percent of the farmers to form groups on their own while we assign the remaining farmers to random peers.