Measuring the Degree of Ambiguity about Probability: Experimental Evidence

This paper aims to experimentally investigate how individual willingness to pay for a lottery is affected by using a new way of representing of probabilistic ambiguity. Thus we can see how individual valuation reacts to different degrees of ambiguity probability information provided to subjects. That way, we can also eliminate “anchoring and adjustment” problem of best estimate or interval representations (Einhorn and Hogarth, 1985) and selection of unreliable probabilities of sets of probabilities representation (Gardenfors and Sarin, 1982).