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

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  • Hartley, Roger

    (University of Manchester)

  • Lanot, Gauthier

    (Keele University)

  • Walker, Ian

    (University of Warwick)

Abstract

This paper analyses the behaviour of contestants in one of the most popular TV gameshows ever to estimate risk aversion. This gameshow has a number of features that makes it well suited for our analysis: the format is extremely straightforward, it involves no strategic decision-making, 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. Our data sources have the virtue that we are able to check the representativeness of the gameshow participants. 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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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 747.

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Length: 53 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:wrk:warwec:747

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Keywords: Risk aversion ; gameshow;

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References

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Cited by:
  1. Klemens Keldenich & Marcus Klemm, 2014. "Double or nothing?! Small groups making decisions under risk in “Quiz Taxi”," Theory and Decision, Springer, Springer, vol. 77(2), pages 243-274, August.
  2. Jasper Lukkezen & Coen Teulings, 2013. "Optimal Fiscal Policy," Tinbergen Institute Discussion Papers 13-064/VI, Tinbergen Institute.
  3. Richard Layard & Guy Mayraz & Stephen J. Nickell, 2007. "The Marginal Utility of Income," SOEPpapers on Multidisciplinary Panel Data Research 50, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Greg Hannsgen, 2007. "Are the Costs of the Business Cycle 'Trivially Small'?," Economics Working Paper Archive wp_492, Levy Economics Institute.
  5. Bliss, Richard T. & Potter, Mark E. & Schwarz, Christopher, 2012. "Decision making and risk aversion in the Cash Cab," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 84(1), pages 163-173.
  6. Jungmin Lee & Cary Deck & Javier Reyes & Chris Rosen, 2008. "Measuring Risk Attitudes Controlling for Personality Traits," Working Papers, Florida International University, Department of Economics 0801, Florida International University, Department of Economics.
  7. Michele Belot, & V. Bhaskar & Jeroen van de Ven, 2006. "A Public Dilemma: Cooperation with Large Stakes and a Large Audience," Economics Discussion Papers, University of Essex, Department of Economics 617, University of Essex, Department of Economics.
  8. Hannsgen, Greg, 2008. "The welfare economics of macroeconomics and chooser-dependent, non-expected utility preferences: A Senian critique with an application to the costs of the business cycle," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 37(5), pages 1980-1993, October.
  9. Klemens Keldenich & Marcus Klemm, 2011. "Double or Nothing!? Small Groups Making Decisions Under Risk in “Quiz Taxi”," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0278, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  10. Maxwell, Andrew L. & Jeffrey, Scott A. & Lévesque, Moren, 2011. "Business angel early stage decision making," Journal of Business Venturing, Elsevier, vol. 26(2), pages 212-225, March.
  11. Driouchi, Ahmed & Kadiri, Molk, 2010. "Emigration of Skilled Labor under Risk Aversion: The Case of Medical Doctors from Middle Eastern and North African Economies," MPRA Paper 22810, University Library of Munich, Germany, revised 20 May 2010.

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