Short article: Is luck on my side? Optimism, pessimism, and ambiguity aversion

Abstract

The influences of optimism and pessimism on ambiguity aversion were investigated in two tasks that manipulated the presence or absence of a potentially competitive experimenter. A total of 112 participants chose which option--ambiguous or known-risk--they preferred in the two slightly differing Ellsberg urns tasks. Optimism was measured using the Extended Life Orientation Test (ELOT). Highly optimistic people showed significantly less ambiguity aversion than less optimistic people when information was given that the number of balls was randomly determined. This pattern was present but less pronounced in the condition when the composition of the ambiguous urn could be interpreted as being influenced (rigged) by the experimenter. Pessimism was uninfluential. Perceptions of the situation, especially the degree of trust in the experimenter, were significantly influenced by the participants' optimism. People who do not have highly optimistic personalities tend to shy away from choosing ambiguous options. When ambiguity is clear, and trust issues are removed, people's optimistic outlook influences their degree of ambiguity aversion and thus their decisions.

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