Second Order Ambiguity in Very Low Probability Risks: Food Safety Valuation
journal contributionposted on 01.12.2010, 00:00 by P. A. Kivi, Jason F. Shogren
Food consumption involves inherently risky decisions with uncertain probabilities. This study examines how second-order ambiguity, or uncertainty over probabilities, affects food safety decisions. We conduct a food safety survey wherein subjects face both unambiguous and ambiguous situations, each with the same expected value. Respondents show a preference for unambiguous situations and state a willingness to pay to avoid ambiguity.