We examine whether model-specific ambiguity-attitude parameters are stable across situations with varying ambiguity and can therefore support out-of-sample prediction. Under Source Theory, ambiguity attitudes are simply a transformation of first-order beliefs. The smooth ambiguity model and modified Hurwicz expected utility (HEU-B) additionally allow for confidence in these beliefs, i.e., second-order beliefs, which should make ambiguity attitudes more transferable. Approximating second-order beliefs in our benchmark experiment, we find initial support: estimated attitudes change substantially across situations under Source Theory but less so under the two alternatives. For a more complete test, the main experiment adapts Dynamically Optimized Sequential Experimentation (DOSE) to elicit second-order beliefs and ambiguity attitudes separately. We compare the models' out-of-sample predictions across situations. HEU-B outperforms the other two models, while the smooth ambiguity model does not outperform Source Theory. Thus, accounting for second-order beliefs does not by itself improve prediction; how the model incorporates them also matters.

This paper studies control reallocation in a partnership, where the partners hold asymmetric information about whose expertise should direct the firm. Using a mechanism design approach, it characterizes the first- and second-best mechanisms that incorporate equity transfers as part of the design. The analysis provides novel insights into how the interdependence between partners' expertise shapes the optimal equity transfer. It shows that both partial and full equity transfers may emerge as part of the optimal mechanism. Specifically, with a control shift, both the first- and second-best solutions may prescribe full equity transfer under substitute expertise, but minimal equity transfer under complementary expertise.

Canonical models of Bayesian persuasion assume that the sender knows the receiver's preferences when designing information. In many real-world settings, the sender knows only how common each type of preference is, not which type of receiver she will face. We study Bayesian persuasion with such type uncertainty in a laboratory experiment. By manipulating the receiver's payoff structure, we create two types: one is harder to persuade, while the other is easier to persuade because its payoff makes the sender-preferred action more attractive. Across two between-subjects treatments, we vary only the receiver-type distribution, so that either the hard-to-persuade type or the easier-to-persuade type is more common. We find that senders adjust their plans in the direction predicted by theory: when the easier-to-persuade type is more common, they choose less informative plans. The adjustment, however, is smaller than the theoretical benchmark predicts. We argue that this smaller magnitude reflects a rational response rather than a mere underreaction: the easier-to-persuade type turns out harder to persuade than theory predicts, and senders appear both to anticipate this in their beliefs and to react by supplying more information when that type is more common.

We examine the impact of standard and probabilistic financial literacy on ambiguity attitudes towards real-world financial assets. In a laboratory experiment, we provide subjects with either no literacy, only standard financial literacy, or we couple this with probabilistic literacy – cognitive instructions highlighting the variability of asset prices. We then elicit Ambiguity attitudes for the stock of a locally well-known company and for Bitcoin. With respect to the no literacy group, we find that Probabilistic Literacy decreases ambiguity aversion towards both assets, with the effect concentrated among those who deemed the treatment most useful. Probabilistic Literacy increases (decreases) ambiguity insensitivity towards the stock (Bitcoin). Standard Financial Literacy does not move ambiguity attitudes for any assets. Probabilistic Literacy also reduces choice noise relative to both other treatment arms. These findings underscore the importance of probabilistic reasoning in financial education and show that ambiguity attitudes – and their responsiveness to literacy interventions – depend critically on the underlying financial asset.

Oil field unitization is a unique, high-stakes economic problem involving multilateral bargaining among many agents with certain positive surplus from agreement. We theoretically characterize and experimentally test the problem under three information structures: complete information, symmetric incomplete information, and asymmetric information in the form of private information about holdings. Our cooperative bargaining theoretical framework suggests that agreement is always possible under both symmetric information structures but may fail under asymmetric information. Conditional on agreement, the returns to private holdings should be highest under asymmetric information, and weakly higher under complete information than under symmetric incomplete information. Experiments confirm that agreement rates are lowest under asymmetric information and similar under both symmetric information structures. However, returns to private holdings are discounted similarly under asymmetric and symmetric information, with both falling below those under complete information. It appears that subjects consistently impose norms that discount holdings that are not commonly known with certainty. We re-examine evidence from failed unitization attempts in the field and find they are consistent with this explanation.