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Indiana University Bloomington

BEPP

The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and 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