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Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences

Author

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  • Sebastian O. Schneider
  • Matthias Sutter

Abstract

Using new methods, we measure the intensities of higher-order risk preferences (prudence and temperance) in an incentivized experiment with 658 adolescents. Aligned with theory, we find that higher-order risk preferences are strongly related to field behavior, including prevention, health, addictive behavior, and financial decision-making. Most importantly, we show that ignoring prudence and temperance can yield misleading conclusions about the relation of risk preferences to field behavior, and that survey measures of risk tolerance often relate to field behavior because they capture higher-order risk preferences.

Suggested Citation

  • Sebastian O. Schneider & Matthias Sutter, 2026. "Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences," American Economic Review, American Economic Association, vol. 116(1), pages 88-118, January.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:1:p:88-118
    DOI: 10.1257/aer.20211217
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    More about this item

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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