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Measuring Individual Risk Attitudes in the Lab: Task or Ask? An Empirical Comparison

Lönnqvist, Jan-Erik; Verkasalo, Markku; Walkowitz, Gari; … - Institut für Weltwirtschaft (IfW) - 2014

the lab — here the amount sent in a trust game (Berg, Dickaut, McCabe, 1995). As it turns out, the measures themselves are … correlations with a Big Five personality measure and is correlated with actual risk-taking behaviour. The results suggest that the …)experiments. Moreover, with respect to behaviour in the trust game, we find a high re-test stability of transfers (? = .70). This further …

Persistent link: https://www.econbiz.de/10010886955

Paradoxes and Mechanisms for Choice under Risk

Cox, James C.; Sadiraj, Vjollca; Schmidt, Ulrich - Institut für Weltwirtschaft (IfW) - 2011

Experiments on choice under risk typically involve multiple decisions by individual subjects. The choice of mechanism for selecting decision(s) for payoff is an essential design feature that is often driven by appeal to the isolation hypothesis or the independence axiom. We report two...

Persistent link: https://www.econbiz.de/10009144796

Explaining the harmonic sequence paradox

Schmidt, Ulrich; Zimper, Alexander - Institut für Weltwirtschaft (IfW) - 2011

According to the harmonic sequence paradox (Blavatskyy 2006), an expected utility decision maker's willingness-to-pay for a gamble whose expected payoffs evolve according to the harmonic series is finite if and only if his marginal utility of additional income becomes zero for rather low payoff...

Persistent link: https://www.econbiz.de/10009216280

Pricing risk and ambiguity: The effect of perspective taking

Trautmann, Stefan T.; Schmidt, Ulrich - Institut für Weltwirtschaft (IfW) - 2011

There is a large literature showing that willingness-to-accept (WTA) is usually much higher than willingness-to-pay (WTP) in empirical studies although they should be roughly equal according to traditional economic theory. A second stream of literature shows that people are typically ambiguity...

Persistent link: https://www.econbiz.de/10009276732

Endogenous Prospect Theory

Schmidt, Ulrich; Zank, Horst - Institut für Weltwirtschaft (IfW) - 2010

In previous models of (cumulative) prospect theory reference-dependence of preferences is imposed beforehand and the location of the reference point is exogenously determined. This paper provides an axiomatization of a new specification of cumulative prospect theory, termed endogenous prospect...

Persistent link: https://www.econbiz.de/10010955835

An experimental investigation of the disparity between WTA and WTP for lotteries

Schmidt, Ulrich; Traub, Stefan - Institut für Weltwirtschaft (IfW) - 2009

In this paper we experimentally investigate the disparity between willingness-to-accept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show...

Persistent link: https://www.econbiz.de/10010956013

Estimating risk attitudes in conventional and artefactual lab experiments: The importance of the underlying assumptions

Drichoutis, Andreas C.; Koundouri, Phoebe - Institut für Weltwirtschaft (IfW) - 2012

In this paper the authors assess the importance of sample type in the estimation of risk preferences. The authors elicit and compare risk preferences from student subjects and subjects drawn from the general population, using the multiple price list method devised by Holt and Laury (Risk...

Persistent link: https://www.econbiz.de/10010956059

Reconsidering the common ratio effect: The roles of compound independence, reduction, and coalescing

Schmidt, Ulrich; Seidl, Christian - Institut für Weltwirtschaft (IfW) - 2014

Common ratio effects should be ruled out if subjects' preferences satisfy compound independence, reduction of compound lotteries, and coalescing. In other words, at least one of these axioms should be violated in order to generate a common ratio effect. Relying on a simple experiment, we...

Persistent link: https://www.econbiz.de/10010886877

Risk Preferences may be Time Preferences: A Comment on Andreoni and Sprenger (2012)

Schmidt, Ulrich - Institut für Weltwirtschaft (IfW) - 2014

In an intensively discussed paper, Andreoni and Sprenger (2012) , henceforth A&S, present an experiment where subjects can allocate money between two different points of time under the condition of risk. A&S claim that their results refute discounted expected utility (DEU) as well as prospect...

Persistent link: https://www.econbiz.de/10010886922

Alternative Payoff Mechanisms for Choice under Risk

Cox, James C.; Sadiraj, Vjollca; Schmidt, Ulrich - Institut für Weltwirtschaft (IfW) - 2014

Most experiments on decision theory ask individual subjects to make more than one decision. The isolation hypothesis is commonly used to justify the choice of the random lottery incentive mechanism as the preferred payoff protocol. This research note reports on the main findings on the...

Persistent link: https://www.econbiz.de/10010886962