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An expected utility maximizer walks into a bar..

Author Info

  • 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. L. Corazzini & A. Filippin & P. Vanin, 2014. "Economic Behavior under Alcohol Influence: An Experiment on Time, Risk, and Social Preferences," Working Papers wp944, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. 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.

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