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Ambiguity and risk measures in the lab and students’ real-life borrowing behavior

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  • Fairley, Kim
  • Weitzel, Utz

Abstract

This study analyzes the external validity of experimentally elicited ambiguity aversion, likelihood insensitivity and risk aversion on real-life decision-making in the field of student loans. Our main finding is that ambiguity aversion, likelihood insensitivity and risk aversion are not related to the decision to take out a student loan nor to the amount students decide to borrow, conditional on having a loan. We discuss our results in the context of recent advances to relate lab measures of ambiguity aversion and likelihood insensitivity to real economic decisions.

Suggested Citation

  • Fairley, Kim & Weitzel, Utz, 2017. "Ambiguity and risk measures in the lab and students’ real-life borrowing behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 85-98.
    • Handle: RePEc:eee:soceco:v:67:y:2017:i:c:p:85-98
    DOI: 10.1016/j.socec.2016.12.001
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    More about this item

    Keywords

    Ambiguity aversion; Likelihood insensitivity; Risk aversion; Borrowing behavior; Student loans;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H4 - Public Economics - - Publicly Provided Goods

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