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Updated: May 28, 2026
13:04
Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods
Published on: September 19, 2012
Pricing risk and ambiguity: the effect of perspective taking
Stefan T Trautmann1, Ulrich Schmidt
1Department of Social Psychology & Department of Economics, Tilburg University, Tilburg, The Netherlands. s.t.trautmann@uvt.nl
Quarterly Journal of Experimental Psychology (2006)
|October 4, 2011
Summary
Selling and buying prices differ more under ambiguity (unknown probabilities) than risk (known probabilities). This valuation gap is influenced by how prospects are compared and the specific viewpoint of the seller or buyer.
Area of Science:
- Decision Sciences
- Behavioral Economics
- Risk and Ambiguity Theory
Background:
- A consistent difference exists between selling and buying prices for uncertain prospects.
- Decisions under uncertainty are influenced by known probabilities (risk) and unknown probabilities (ambiguity).
Purpose of the Study:
- To investigate how risk and ambiguity affect the valuation disparity between selling and buying perspectives.
- To examine the moderating roles of comparative evaluation and perspective uniqueness on this disparity.
Main Methods:
- Distinguishing between decisions under risk and ambiguity.
- Analyzing the influence of evaluation framing (comparative vs. noncomparative) and perspective (seller vs. buyer).
Main Results:
- The valuation disparity between selling and buying perspectives is significantly larger under ambiguity than under risk.
- This increased disparity under ambiguity is moderated by both the comparative nature of the evaluation and the uniqueness of the valuation perspective.
Conclusions:
- Findings support recent theoretical models of pricing under uncertainty.
- The study has implications for understanding market behavior and the utility of the ambiguity paradigm in research.
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