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Eliciting risk preferences using choice lists

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  • David J. Freeman
  • Yoram Halevy
  • Terri Kneeland

Abstract

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 ().

Suggested Citation

  • David J. Freeman & Yoram Halevy & Terri Kneeland, 2019. "Eliciting risk preferences using choice lists," Quantitative Economics, Econometric Society, vol. 10(1), pages 217-237, January.
    • Handle: RePEc:wly:quante:v:10:y:2019:i:1:p:217-237
    DOI: 10.3982/QE856
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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