Marc Friedman

How does Ambiguity Aversion and the Anchoring Effect in the same scenario affect one’s ability to make a decision? Does one bias overpower the other or do they work in tandem?

Started Dec. 18, 2023

Abstract or project description

In Behavioral Economics, models operate under the notion that consumers are not rational. In order to account for this, many psychological effects and mathematical models are made as a way of justifying people’s irrational decisions. In my experiment, I want to test two of these cognitive biases, Ambiguity Aversion and the Anchoring Effect, and put them to the test in a situation where both of these biases would be present. In this experiment, my goal is to observe whether these biases attempt to overpower another or if they work in tandem. On top of this, I would like to compare the effects of each of these biases in a one-on-one situation in addition to a control with none of these biases at hand. This could be relevant to explain incomplete contracts, volatility in stock markets, and selective abstention in elections, as well as negotiation techniques and a broader psychological understanding of the human mind when two or more cognitive biases are at play.