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Risk aversion: an experiment with self-employed workers and salaried workers

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  • Nathalie Colombier
  • Laurent Denant Boemont
  • Youenn Loheac
  • David Masclet

Abstract

In this article we present the results of a lottery-choice experiment to address the following questions: Do risk vary across individuals? What is the impact of context on risk aversion? The originality of this research lies in introducing variability in socio-demographic characteristics by recruiting not only students but also 'real people' among salaried workers and self-employed workers. Our results indicate that risk attitude strongly varies across individuals. In particular, individuals who are self employed tend to be significantly less risk averse than others. In addition, we replicated Holt and Laury (2002, 2005) and Harrison et al. (2005)'s findings that individuals tend to be more risk averse with higher payoffs. Finally, our results concerning a potential experience effect indicate the existence of a significant order effect for both treatments.

Suggested Citation

  • Nathalie Colombier & Laurent Denant Boemont & Youenn Loheac & David Masclet, 2008. "Risk aversion: an experiment with self-employed workers and salaried workers," Applied Economics Letters, Taylor & Francis Journals, vol. 15(10), pages 791-795.
  • Handle: RePEc:taf:apeclt:v:15:y:2008:i:10:p:791-795
    DOI: 10.1080/13504850600749149
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    Cited by:

    1. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    2. Eisenhauer, Joseph G., 2010. "Rank-ordering of risk preferences with conventional and discrete measures," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 291-297, August.
    3. Howard, Gregory E. & Roe, Brian E., 2011. "Comparing the Risk Attitudes of U.S. and German Farmers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114528, European Association of Agricultural Economists.
    4. Li, Yue & Mastrogiacomo, Mauro & Hochguertel, Stefan & Bloemen, Hans, 2016. "The role of wealth in the start-up decision of new self-employed: Evidence from a pension policy reform," Labour Economics, Elsevier, vol. 41(C), pages 280-290.

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