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Attitudes Towards Risk: An Experiment

Author

Listed:
  • J¸rgen Eichberger

    () (Ruprecht Karls University Heidelberg, Germany)

  • Werner G¸th

    () (Max Planck Institute for Research into Economic Systems, Germany)

  • Wieland M¸ller

    () (Humboldt University Berlin, Germany)

Abstract

The evaluations of a repeated lottery with and without the option to sell the second-stage lottery are compared theoretically and experimentally. Comparing individuals' risk attitudes, we find that risk attitudes differ depending on the measure of risk attitude applied. We also find that subjects show low or no risk aversion, but put very high value on the opportunity to sell the lottery in the second stage of the decision problem. These findings cast doubts on the suitability of the random price mechanism for truthful revelation of willingness to pay in sequential decision problems. Copyright Blackwell Publishing Ltd 2003.

Suggested Citation

  • J¸rgen Eichberger & Werner G¸th & Wieland M¸ller, 2003. "Attitudes Towards Risk: An Experiment," Metroeconomica, Wiley Blackwell, vol. 54(1), pages 89-124, February.
  • Handle: RePEc:bla:metroe:v:54:y:2003:i:1:p:89-124
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    Cited by:

    1. Sasaki, Shunichiro & Xie, Shiyu & Ohtake, Fumio & Qin, Jie & Tsutsui, Yoshiro, 2008. "Experiments on risk attitude: The case of Chinese students," China Economic Review, Elsevier, vol. 19(2), pages 245-259, June.
    2. Dittrich, Dennis A.V. & Büchner, Susanne & Kulesz, Micaela M., 2015. "Dynamic repeated random dictatorship and gender discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 55(C), pages 81-90.
    3. repec:bla:germec:v:18:y:2017:i:1:p:118-131 is not listed on IDEAS
    4. Uri Benzion & Jan Krahnen & Tal Shavit, 2011. "Subjective evaluation of delayed risky outcomes for buying and selling positions: the behavioral approach," Annals of Finance, Springer, vol. 7(2), pages 247-265, May.

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