Comparative ignorance hypothesis and business training

Abstract

The comparative ignorance hypothesis, first demonstrated in Heath and Tversky (1991), is that ambiguity aversion is driven by the comparison with more familiar events or more knowledgeable individuals. For example, when own ignorance is perceived to be higher, individuals tend to exhibit stronger ambiguity aversion. We use this insight to provide a theoretical explanation to a welldocumented phenomenon of business training having limited, or even negative, effect on post-training profits of program participants. (C) 2020 Elsevier B.V. All rights reserved.