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Measuring Individual Risk Attitudes in the Lab: Task or Ask?: An Empirical Comparison

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  • Jan-Erik Lönnqvist
  • Markku Verkasalo
  • Gari Walkowitz
  • Philipp C. Wichardt

Abstract

This 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 ( · =.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 is the more adequate measure of individual risk attitudes for the analysis of behaviour in economic (lab) experiments. Moreover, with respect to trust, the high re-test stability of trust transfers ( ·= .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 Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 370.

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Length: 20 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp370

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Keywords: Risk attitudes; trust; personality; lab experiments;

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Cited by:
  1. Gloede, Oliver & Menkhoff, Lukas & Waibel, Hermann, 2011. "Risk attitude and risk behavior: Comparing Thailand and Vietnam," Proceedings of the German Development Economics Conference, Berlin 2011 33, Verein für Socialpolitik, Research Committee Development Economics.
  2. Uwe Dulleck & Jacob Fell & Jonas Fooken, 2011. "Within-subject Intra- and Inter-method consistency of two experimental risk attitude elicitation," NCER Working Paper Series 74, National Centre for Econometric Research.
  3. Hardeweg, Bernd & Menkhoff, Lukas & Waibel, Hermann, 2011. "Experimentally-validated survey evidence on individual risk attitudes in rural Thailand," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-464, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  4. Howard, Gregory E. & Roe, Brian E., 2011. "Comparing the Risk Attitudes of U.S. and German Farmers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114528, European Association of Agricultural Economists.
  5. Fabio Galeotti & Daniel John Zizzo, 2012. "Trust and trustworthiness with singleton groups," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 12-03, School of Economics, University of East Anglia, Norwich, UK..

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