- Title
- The Thrill of Gradual Learning
- Author(s)
- Faruk R. Gul Faruk Gul (Princeton University)
- Paulo Natenzon Paulo Natenzon (Washington University in St. Louis)
- Erkut Y. Ozbay Erkut Ozbay (University of Maryland)
- Wolfgang Pesendorfer Wolfgang Pesendorfer (Princeton University)
- Abstract
- We report on an experiment that shows subjects prefer a gradual resolution of uncertainty when information about winning yields decisive bad news but inconclusive good news. This behavior is difficult to reconcile with existing theories of choice under uncertainty, including the Kreps-Porteus model. We show how the behavioral patterns uncovered by our experiment can be understood as arising from subjects’ special emphasis on their best (peak) and worst (trough) experiences along the realized path of uncertainty.
- Creation Date
- 2020-10
- Section URL ID
- Paper Number
- 2020-8
- URL
- https://www.dropbox.com/s/d43ujjje0rffrp1/rrexperiment.pdf?dl=0
- File Function
- Jel
- D80, D81
- Keyword(s)
- uncertainty
- Suppress
- false
- Series
- 13