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Who really wants to be a millionaire? Estimates of risk aversion from gameshow data

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Author Info
Roger Hartley (University of Manchester, Manchester)
Gauthier Lanot (Keele University, Staffs)
Ian Walker (University of Warwick, Coventry)

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Abstract

This paper analyses the behaviour of TV gameshow contestants to estimate risk aversion. We are able to show that the gameshow participants are broadly representative of the population as a whole. The gameshow has a number of features that makes it well suited for our analysis: the format is extremely straightforward, it involves no strategic decisionmaking, we have a large number of observations, and the prizes are cash and paid immediately, and cover a large range – from £100 up to £1 million. Even though the CRRA model is extremely restrictive we find that a coefficient or relative risk aversion which is close to unity fits the data across a wide range of wealth remarkably well.

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Publisher Info
Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 200607.

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Length: 54 pages
Date of creation: 10 May 2006
Date of revision:
Handle: RePEc:ucd:wpaper:200607

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Related research
Keywords: Risk aversion; gameshow;

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Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Greg Hannsgen, 2007. "Are the Costs of the Business Cycle 'Trivially Small'?," Economics Working Paper Archive wp_492, Levy Economics Institute, The. [Downloadable!]
  2. Richard Layard & Guy Mayraz & Stephen Nickell, 2007. "The Marginal Utility of Income," CEP Discussion Papers dp0784, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  3. Michele Belot, & V. Bhaskar & Jeroen van de Ven, 2006. "A Public Dilemma: Cooperation with Large Stakes and a Large Audience," Economics Discussion Papers 617, University of Essex, Department of Economics. [Downloadable!]
  4. Jungmin Lee & Cary Deck & Javier Reyes & Chris Rosen, 2008. "Measuring Risk Attitudes Controlling for Personality Traits," Working Papers 0801, Florida International University, Department of Economics. [Downloadable!]
  5. Fabrizio Botti & Anna Conte & Daniela T. Di Cagno & Carlo D'Ippoliti, . "Risk attitude in real decision proBLEMs," Quaderni DPTEA 144, Department of Economic and Business Sciences, LUISS Guido Carli. [Downloadable!]
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