Eliciting risk preferences using choice lists

We study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Using an experiment with online workers, we find that subjects choose the risky lottery rather than a sure payment significantly more often when responding to a choice list. This behavior can be rationalized by the interaction between nonexpected utility and the random incentive system, as suggested by Karni and Safra (1987).

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Year of publication:	2019
Authors:	Freeman, David ; Halevy, Yoram ; Kneeland, Terri
Published in:	Quantitative Economics. - New Haven, CT : The Econometric Society, ISSN 1759-7331. - Vol. 10.2019, 1, p. 217-237
Publisher:	New Haven, CT : The Econometric Society
Subject:	Random incentive system \| isolation independence axiom \| multiple price list \| reduction of compound lotteries \| preference reversals \| certainty effect

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Type of publication:	Article
Type of publication (narrower categories):	Article
Language:	English
Other identifiers:	10.3982/QE856 [DOI] 1663463042 [GVK] hdl:10419/217141 [Handle]
Classification:	C90 - Design of Experiments. General ; C91 - Laboratory, Individual Behavior ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; D90 - Intertemporal Choice and Growth. General
Source:	EconStor

Persistent link: https://www.econbiz.de/10012215371