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Assessing Individual Risk Attitudes Using Field Data From Lottery Games

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Author Info

  • Connel Fullenkamp

    (Duke University)

  • Rafael Tenorio

    (DePaul University)

  • Robert Battalio

    (University of Notre Dame)

Abstract

We use information from the television game show with the highest guaranteed average payoff in the United States, Hoosier Millionaire, to analyze risktaking in a high-stakes experiment. We characterize gambling decisions under alternative assumptions about contestant behavior and preferences, and derive testable restrictions on individual risk attitudes based on this characterization. We then use an extensive sample of gambling decisions to estimate distributions of risk-aversion parameters consistent with the theoretical restrictions and revealed preferences. We find that although most contestants display risk-averse preferences, the extent of the risk aversion implied by our estimates varies substantially with the stakes involved in the different decisions. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 85 (2003)
Issue (Month): 1 (February)
Pages: 218-226

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Handle: RePEc:tpr:restat:v:85:y:2003:i:1:p:218-226

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Web page: http://mitpress.mit.edu/journals/

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Cited by:
  1. Nicolas de Roos & Yianis Sarafidis, 2010. "Decision making under risk in Deal or No Deal," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(6), pages 987-1027.
  2. Eisenhauer, Joseph G., 2006. "Risk aversion and prudence in the large," Research in Economics, Elsevier, vol. 60(4), pages 179-187, December.
  3. Roger Hartley & Gauthier Lanot & Ian Walker, 2006. "Who really wants to be a millionaire? Estimates of risk aversion from gameshow data," Working Papers 200607, Geary Institute, University College Dublin.
  4. Shunichiro Sasaki & Shiyu Xie & Fumio OhtakeAuthor-Name: & Jie Qin & Yoshiro Tsutsui, 2006. "Experiments on Risk Attitude: The Case of Chinese Students," ISER Discussion Paper 0664, Institute of Social and Economic Research, Osaka University.
  5. Bliss, Richard T. & Potter, Mark E. & Schwarz, Christopher, 2012. "Decision making and risk aversion in the Cash Cab," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 163-173.
  6. Klemens Keldenich & Marcus Klemm, 2014. "Double or nothing?! Small groups making decisions under risk in “Quiz Taxi”," Theory and Decision, Springer, vol. 77(2), pages 243-274, August.
  7. Driouchi, Ahmed & Kadiri, Molk, 2010. "Emigration of Skilled Labor under Risk Aversion: The Case of Medical Doctors from Middle Eastern and North African Economies," MPRA Paper 22810, University Library of Munich, Germany, revised 20 May 2010.
  8. Gee, C., 2007. "Risky Choice and Type-Uncertainty in "Deal or No Deal?"," Cambridge Working Papers in Economics 0758, Faculty of Economics, University of Cambridge.
  9. Jungmin Lee & Cary Deck & Javier Reyes & Chris Rosen, 2008. "Measuring Risk Attitudes Controlling for Personality Traits," Working Papers 0801, Florida International University, Department of Economics.
  10. Sjögren Lindquist, Gabriella & Säve-Söderbergh, Jenny, 2006. "Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'," Working Paper Series 9/2006, Swedish Institute for Social Research.
  11. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
  12. Klemens Keldenich & Marcus Klemm, 2011. "Double or Nothing!? Small Groups Making Decisions Under Risk in “Quiz Taxi”," Ruhr Economic Papers 0278, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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