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Salience, Risky Choices and Gender

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  • Alison Booth
  • Patrick Nolen

Abstract

Risk theories typically assume individuals make risky choices using probability weights that differ from objective probabilities. Recent theories suggest that probability weights vary depending on which portion of a risky environment is made salient. Using experimental data we show that salience affects young men and women differently, even after controlling for cognitive and non-cognitive skills. Men are significantly more likely than women to switch from a certain to a risky choice once the upside of winning is made salient, even though the expected value of the choice remains the same.

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Bibliographic Info

Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 659.

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Date of creation: Feb 2012
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Handle: RePEc:auu:dpaper:659

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Keywords: gender; salience; risk-aversion; probability weights; cognitive ability;

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  1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  2. Booth, Alison L. & Cardona Sosa, Lina Marcela & Nolen, Patrick J., 2011. "Gender Differences in Risk Aversion: Do Single-Sex Environments Affect their Development?," IZA Discussion Papers 6133, Institute for the Study of Labor (IZA).
  3. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2009. "Are Risk Aversion and Impatience Related to Cognitive Ability?," CESifo Working Paper Series 2620, CESifo Group Munich.
  4. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-71, March.
  5. Helga Fehr-Duda & Manuele Gennaro & Renate Schubert, 2006. "Gender, Financial Risk, and Probability Weights," Theory and Decision, Springer, vol. 60(2), pages 283-313, 05.
  6. Alison L. Booth & Patrick Nolen, 2009. "Gender Differences in Risk Behaviour: Does Nurture Matter?," CEPR Discussion Papers 601, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  7. Eckel, Catherine C. & Grossman, Philip J., 2008. "Men, Women and Risk Aversion: Experimental Evidence," Handbook of Experimental Economics Results, Elsevier.
  8. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
  9. Steffen Huck & Wieland Müller, 2012. "Allais for all: Revisiting the paradox in a large representative sample," Journal of Risk and Uncertainty, Springer, vol. 44(3), pages 261-293, June.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Salience, Risky Choices and Gender
    by Nicholas Gruen in Club Troppo on 2012-03-23 02:47:49
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Cited by:
  1. Booth, Alison L & Cardona Sosa, Lina & Nolen, Patrick, 2011. "Gender Differences in Risk Aversion: Do Single-Sex Environments Affect their Development?," CEPR Discussion Papers 8690, C.E.P.R. Discussion Papers.
  2. Rau, Holger A., 2014. "The disposition effect and loss aversion: Do gender differences matter?," Economics Letters, Elsevier, vol. 123(1), pages 33-36.

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