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Selection and Mode Effects in Risk Preference Elicitation Experiments

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  • Gaudecker, H.M. von
  • Soest, A.H.O. van
  • Wengstrom, E.

    (Tilburg University, Center for Economic Research)

Abstract

We combine data from a risk preference elicitation experiment conducted on a representative sample via the Internet with laboratory data on student subjects for the same experiment in order to investigate effects of implementation mode and of subject pool selection. We find that the frequency of errors in the lab experiment is drastically below that of the representative sample in the Internet experiment, and average risk aversion is lower as well. Considering the student-like subsample of the Internet subjects and comparing a traditional lab design with an Internet-like design in the lab gives us two ways to decompose these differences into differences due to subject pool selection and differences due to implementation mode. Both lead to the conclusion that the differerences are due to selection and not to implementation mode. An analysis of the various steps leading to participation or non-participation in the Internet survey leads to the conclusion that these processes are selective in selecting subjects who make fewer errors, but do not lead to biased conclusions on risk preferences. These findings point at the usefulness of the Internet survey as an alternative to a student pool in the laboratory if the ambition is to use the experiments to draw inference on a broad population.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2008-11.

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Date of creation: 2008
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Handle: RePEc:dgr:kubcen:200811

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Web page: http://center.uvt.nl

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Keywords: Risk aversion; Internet surveys; Laboratory experiments;

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References

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Citations

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Cited by:
  1. Adam S. Booij & Bernard M.S. Van Praag & Gijs Van De Kuilen, 2009. "A Parametric Analysis of Prospect Theory's Functionals for the General Population," CESifo Working Paper Series 2609, CESifo Group Munich.
  2. Chew, Soo Hong & Ebstein, Richard P. & Zhong, Songfa, 2013. "Sex-hormone genes and gender difference in ultimatum game: Experimental evidence from China and Israel," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 28-42.
  3. Lisa R. Anderson & Jennifer M. Mellor, 2008. "Are Risk Preferences Stable? Comparing an Experimental Measure with a Validated Survey-Based Measure," Working Papers 74, Department of Economics, College of William and Mary.
  4. Stefan Zeisberger & Dennis Vrecko & Thomas Langer, 2012. "Measuring the time stability of Prospect Theory preferences," Theory and Decision, Springer, vol. 72(3), pages 359-386, March.
  5. Hans-Martin von Gaudecker & Arthur van Soest & Erik Wengstrom, 2011. "Heterogeneity in Risky Choice Behavior in a Broad Population," American Economic Review, American Economic Association, vol. 101(2), pages 664-94, April.
  6. Hans-Martin Gaudecker & Arthur Soest & Erik Wengström, 2012. "Experts in experiments," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 159-190, October.
  7. Booij, Adam S. & van de Kuilen, Gijs, 2009. "A parameter-free analysis of the utility of money for the general population under prospect theory," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 651-666, August.
  8. Gaudecker, Hans-Martin von & van Soest, Arthur & Wengström, Erik, 2011. "Experts in Experiments: How Selection Matters for Estimated Distributions of Risk Preferences," IZA Discussion Papers 5575, Institute for the Study of Labor (IZA).

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