We illustrate the strong implications of recursivity, a standard assumption
in dynamic environments, on attitudes toward uncertainty. In intertemporal
consumption choice problems, recursivity always implies constant absolute ambiguity
aversion (CAAA) when applying the standard dynamic extension of
monotonicity. Our analysis also yields a functional equation called ”generalized
rectangularity,” as it generalizes the standard notion of rectangularity for
recursive maxmin preferences to general certainty equivalents. An important
implication of this paper is that if uncertainty aversion is modeled as a form
of convexity of preferences, recursivity limits us to only recursive variational
preferences.

Communication is rarely perfect, but rather prone to error of transmission and reception. Often the origin of these errors cannot be properly quantified and is this imprecisely known. We analyze the impact of an ambiguous error by considering a sender-receiver game of common interest in which a noisy channel may alter the received message. The noise is ambiguous in the sense that the likelihood of an error occurring and the process generating the received message in case of an error are Knightianly unknown. Efficient ex-ante and interim equilibria are characterized under maxmin preferences. While the sender can disregard ambiguity, the receiver reveals a dynamic inconsistent, but astonishing behavior. Her interim action will always be closer to the pooling action than her ex-ante action, as if facing a higher likelihood of an occurring error.