Investment Behaviors Under Epistemic versus Aleatory Uncertainty 2 Daniel J. Walters, Assistant Professor of Marketing, INSEAD Europe, Marketing Department, Boulevard de Constance, 77300 Fontainebleau, 01 60 72 40 00,
[email protected] Gülden Ülkümen, Gülden Ülkümen, Associate Professor of Marketing at University of Southern California, 701 Exposition Boulevard, Hoffman Hall 516, Los Angeles, CA 90089- 0804,
[email protected] Carsten Erner, UCLA Anderson School of Management, 110 Westwood Plaza, Los Angeles, CA, USA 90095-1481,
[email protected] David Tannenbaum, Assistant Professor of Management, University of Utah, Salt Lake City, UT, USA, (801) 581-8695,
[email protected] Craig R. Fox, Harold Williams Professor of Management at the UCLA Anderson School of Management, Professor of Psychology and Medicine at UCLA, 110 Westwood Plaza #D511 Los Angeles, CA, USA 90095-1481, (310) 206-3403,
[email protected] 3 Abstract In nine studies, we find that investors intuitively distinguish two independent dimensions of uncertainty: epistemic uncertainty that they attribute to missing knowledge, skill, or information, versus aleatory uncertainty that they attribute to chance or stochastic processes. Investors who view stock market uncertainty as higher in epistemicness (knowability) are more sensitive to their available information when choosing whether or not to invest, and are more likely to reduce uncertainty by seeking guidance from experts. In contrast, investors who view stock market uncertainty as higher