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The “bomb” risk elicitation task

  • Paolo Crosetto

    ()

  • Antonio Filippin

    ()

This paper presents the Bomb Risk Elicitation Task (BRET), an intuitive procedure aimed at measuring risk attitudes. Subjects decide how many boxes to collect out of 100, one of which contains a bomb. Earnings increase linearly with the number of boxes accumulated but are zero if the bomb is also collected. The BRET requires minimal numeracy skills, avoids truncation of the data, allows the precise estimation of both risk aversion and risk seeking, and is not affected by the degree of loss aversion or by violations of the Reduction Axiom. We validate the BRET, test its robustness in a large-scale experiment, and compare it to three popular risk elicitation tasks. Choices react significantly only to increased stakes, and are sensible to wealth effects. Our experiment rationalizes the gender gap that often characterizes choices under uncertainty by means of a higher loss rather than risk aversion. Copyright Springer Science+Business Media New York 2013

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File URL: http://hdl.handle.net/10.1007/s11166-013-9170-z
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Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 47 (2013)
Issue (Month): 1 (August)
Pages: 31-65

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Handle: RePEc:kap:jrisku:v:47:y:2013:i:1:p:31-65
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100299

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