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An expected utility maximizer walks into a bar..

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  • Daniel Burghart

    ()

  • Paul Glimcher
  • Stephanie Lazzaro

Abstract

We conducted field experiments at a bar to test whether blood alcohol concentration (BAC) correlates with violations of the generalized axiom of revealed preference (GARP) and the independence axiom. We found that individuals with BACs well above the legal limit for driving adhere to GARP and independence at rates similar to those who are sober. This finding led to the fielding of a third experiment to explore how risk preferences might vary as a function of BAC. We found gender-specific effects: Men did not exhibit variations in risk preferences across BACs. In contrast, women were more risk averse than men at low BACs but exhibited increasing tolerance towards risks as BAC increased. Based on our estimates, men and women’s risk preferences are predicted to be identical at BACs nearly twice the legal limit for driving. We discuss the implications for policy-makers. Copyright Springer Science+Business Media New York 2013

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File URL: http://hdl.handle.net/10.1007/s11166-013-9167-7
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Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 46 (2013)
Issue (Month): 3 (June)
Pages: 215-246

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Handle: RePEc:kap:jrisku:v:46:y:2013:i:3:p:215-246
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100299

Keywords: Rationality; Expected utility theory; Risk aversion; Field experiment; Alcohol; D01; D81; C93;

Find related papers by JEL classification:

  • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
  • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
  • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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Cited by:

  1. Frank Sloan & Lindsey Eldred, 2015. "Do preferences of drinker-drivers differ?," International Journal of Health Care Finance and Economics, Springer, vol. 15(2), pages 241-268, June.
  2. Sam COSAERT & Thomas DEMUYNCK, 2013. "Revealed preference theory for finite choice sets," Working Papers Department of Economics ces13.08, KU Leuven, Faculty of Economics and Business, Department of Economics.
  3. Daniel R. Burghart & Thomas Epper & Ernst Fehr, 2014. "The two faces of independence: betweenness and homotheticity," ECON - Working Papers 179, Department of Economics - University of Zurich.
  4. Brocas, Isabelle & Carrillo, Juan D & Combs, T. Dalton & Kodaverdian, Niree, 2015. "Consistency in Simple vs. Complex Choices over the Life Cycle," CEPR Discussion Papers 10457, C.E.P.R. Discussion Papers.
  5. Corazzini, Luca & Filippin, Antonio & Vanin, Paolo, 2014. "Economic Behavior under Alcohol Influence: An Experiment on Time, Risk, and Social Preferences," IZA Discussion Papers 8170, Institute for the Study of Labor (IZA).
  6. Klajdi Bregu & Cary Deck & Lindsay Ham & Salar Jahedi, 2016. "The Effects of Alcohol Use on Economic Decision Making," Working Papers 16-03, Chapman University, Economic Science Institute.
  7. Yiqun Chen & Frank Sloan, 2014. "Subjective Beliefs, Deterrence, and the Propensity to Drive While Intoxicated," NBER Working Papers 20680, National Bureau of Economic Research, Inc.
  8. Castillo, Marco & Dickinson, David L. & Petrie, Ragan, 2014. "Sleepiness, Choice Consistency, and Risk Preferences," IZA Discussion Papers 8709, Institute for the Study of Labor (IZA).

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