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Attitudes Towards Risk: An Experiment

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Author Info

  • J¸rgen Eichberger

    () (Ruprecht Karls University Heidelberg, Germany)

  • Werner G¸th

    () (Max Planck Institute for Research into Economic Systems, Germany)

  • Wieland M¸ller

    () (Humboldt University Berlin, Germany)

Abstract

The evaluations of a repeated lottery with and without the option to sell the second-stage lottery are compared theoretically and experimentally. Comparing individuals' risk attitudes, we find that risk attitudes differ depending on the measure of risk attitude applied. We also find that subjects show low or no risk aversion, but put very high value on the opportunity to sell the lottery in the second stage of the decision problem. These findings cast doubts on the suitability of the random price mechanism for truthful revelation of willingness to pay in sequential decision problems. Copyright Blackwell Publishing Ltd 2003.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Metroeconomica.

Volume (Year): 54 (2003)
Issue (Month): 1 (02)
Pages: 89-124

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Handle: RePEc:bla:metroe:v:54:y:2003:i:1:p:89-124

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Cited by:
  1. Sasaki, Shunichiro & Xie, Shiyu & Ohtake, Fumio & Qin, Jie & Tsutsui, Yoshiro, 2008. "Experiments on risk attitude: The case of Chinese students," China Economic Review, Elsevier, vol. 19(2), pages 245-259, June.
  2. Ohler, Adrienne & Chouinard, Hayley H. & Yoder, Jonathan K., 2007. "Welfare Trade-offs between Transferable and Non-Transferable Lotteries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 7363, Western Agricultural Economics Association.
  3. Uri Benzion & Jan Krahnen & Tal Shavit, 2011. "Subjective evaluation of delayed risky outcomes for buying and selling positions: the behavioral approach," Annals of Finance, Springer, vol. 7(2), pages 247-265, May.

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