Measuring Individual Risk Attitudes in the Lab: Task or Ask? An Empirical Comparison
AbstractThis paper compares two prominent empirical measures of individual risk attitudes - the Holt and Laury (2002) lottery-choice task and the multi-item questionnaire advocated by Dohmen, Falk, Huffman, Schupp, Sunde and Wagner (forthcoming) - with respect to (a) their within-subject stability over time (one year) and (b) their correlation with actual risk-taking behaviour in the lab - here the amount sent in a trust game (Berg, Dickaut, McCabe, 1995). As it turns out, the measures themselves are uncorrelated (both times) and, most importantly, only the questionnaire measure exhibits test-re-test stability (Ï = .78), while virtually no such stability is found in the lottery-choice task. In addition, only the questionnaire measure shows the expected correlations with a Big Five personality measure and is correlated with actual risk-taking behaviour. The results suggest that the questionnaire measure is a better measure of individual risk attitudes than the lottery-choice task. Moreover, with respect to trust, the high re-test stability of trust transfers (Ï = .70) further supports the conjecture that trusting behaviour indeed has a component which itself is a stable individual characteristic (Glaeser, Laibson, Scheinkman and Soutter, 2000).
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Bibliographic InfoPaper provided by Cologne Graduate School in Management, Economics and Social Sciences in its series Cologne Graduate School Working Paper Series with number 02-03.
Date of creation: 18 Feb 2011
Date of revision:
Risk Attitudes; Trust; Personality; Lab Experiments;
Other versions of this item:
- Jan-Erik Lönnqvist & Markku Verkasalo & Gari Walkowitz & Philipp C. Wichardt, 2011. "Measuring Individual Risk Attitudes in the Lab: Task or Ask?: An Empirical Comparison," SOEPpapers on Multidisciplinary Panel Data Research 370, DIW Berlin, The German Socio-Economic Panel (SOEP).
- 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
- Z10 - Other Special Topics - - Cultural Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-CBE-2011-03-05 (Cognitive & Behavioural Economics)
- NEP-EXP-2011-03-05 (Experimental Economics)
- NEP-NEU-2011-03-05 (Neuroeconomics)
- NEP-UPT-2011-03-05 (Utility Models & Prospect Theory)
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