Second-Order Ambiguity in Very Low Probability Risks: Food Safety Valuation

Jason F. Shogren, University of Wyoming
Paul A. Kivi, Bemidji State University

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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.