Role of General Competence in Risk and Ambiguity Preferences

Previous research has demonstrated that risk and ambiguity preferences are both influenced by a decision-maker’s perceived sense of competence. However, related research has been limited to the effects of task-specific competence rather than those of general competence. In this paper, we argue that a perception of competence need not be related to the domain of the evaluated decision in order to impact an individual’s risk and ambiguity preferences. We manipulated participants’ perceived sense of competence in a domain unrelated to the economic gambles they were later asked to evaluate. Although our research did not demonstrate significant differences in uncertainty preferences between our assigned competence groups and our control group, future research that refines and expands upon our methodology may reveal significant evidence supporting our argument.