Second-Order Ambiguity in Very Low Probability Risks: Food Safety Valuation
This item is available in JSTOR (http://www.jstor.org/stable/23243065) and AgEcon Search (http://ageconsearch.umn.edu/handle/97857).
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.