IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v40y2008i1p41-52.html
   My bibliography  Save this article

Risk attitudes in large stake gambles: evidence from a game show

Author

Listed:
  • Cary Deck
  • Jungmin Lee
  • Javier Reyes

Abstract

This article estimates the degree of risk aversion of contestants appearing on 'Vas o No Vas', the Mexican version of 'Deal or No Deal'. We consider both dynamic agents, who fully backward induct and myopic agents that only look forward one period. Further, we vary the level of forecasting sophistication by the agents. We find substantial evidence of risk aversion, the degree of which is more modest than what is typically reported in the literature.

Suggested Citation

  • Cary Deck & Jungmin Lee & Javier Reyes, 2008. "Risk attitudes in large stake gambles: evidence from a game show," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 41-52.
  • Handle: RePEc:taf:applec:v:40:y:2008:i:1:p:41-52 DOI: 10.1080/00036840701235704
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840701235704
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Garrett, Thomas A. & Sobel, Russell S., 1999. "Gamblers favor skewness, not risk: Further evidence from United States' lottery games," Economics Letters, Elsevier, vol. 63(1), pages 85-90, April.
    2. Ali, Mukhtar M, 1977. "Probability and Utility Estimates for Racetrack Bettors," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 803-815, August.
    3. Bailey, Martin J & Olson, Mancur & Wonnacott, Paul, 1980. "The Marginal Utility of Income Does not Increase: Borrowing, Lending, and Friedman-Savage Gambles," American Economic Review, American Economic Association, vol. 70(3), pages 372-379, June.
    4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    5. Lisa Farrell & Roger Hartley, 2002. "Can expected utility theory explain gambling?," Open Access publications 10197/539, School of Economics, University College Dublin.
    6. Kearney, Melissa Schettini, 2005. "State lotteries and consumer behavior," Journal of Public Economics, Elsevier, pages 2269-2299.
    7. Joseph Golec & Maurry Tamarkin, 1998. "Bettors Love Skewness, Not Risk, at the Horse Track," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 205-225, February.
    8. McEnally, Richard W, 1974. "A Note on the Return Behavior of High Risk Common Stocks," Journal of Finance, American Finance Association, vol. 29(1), pages 199-202, March.
    9. Roger Hartley & Lisa Farrell, 2002. "Can Expected Utility Theory Explain Gambling?," American Economic Review, American Economic Association, vol. 92(3), pages 613-624, June.
    10. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    11. Kraus, Alan & Litzenberger, Robert H, 1976. "Skewness Preference and the Valuation of Risk Assets," Journal of Finance, American Finance Association, vol. 31(4), pages 1085-1100, September.
    12. Donkers, Bas & Melenberg, Bertrand & Van Soest, Arthur, 2001. "Estimating Risk Attitudes Using Lotteries: A Large Sample Approach," Journal of Risk and Uncertainty, Springer, vol. 22(2), pages 165-195, March.
    13. Quiggin, John, 1991. "On the Optimal Design of Lotteries," Economica, London School of Economics and Political Science, vol. 58(229), pages 1-16, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cary Deck & Harris Schlesinger, 2010. "Exploring Higher Order Risk Effects," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1403-1420.
    2. Nicolas de Roos & Yianis Sarafidis, 2010. "Decision making under risk in Deal or No Deal," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(6), pages 987-1027.
    3. Anna Conte & Peter G. Moffatt & Fabrizio Botti & Daniela T. Di Cagno & Carlo D’Ippoliti, 2012. "A test of the rational expectations hypothesis using data from a natural experiment," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4661-4678, December.
    4. Pan He & Marcella Veronesi & Stefanie Engel, 2016. "Consistency of Risk Preference Measures and the Role of Ambiguity: An Artefactual Field Experiment from China," Working Papers 03/2016, University of Verona, Department of Economics.
    5. Guido Baltussen & G. Post & Martijn Assem & Peter Wakker, 2012. "Random incentive systems in a dynamic choice experiment," Experimental Economics, Springer;Economic Science Association, vol. 15(3), pages 418-443, September.
    6. Gigi Foster & Paul Frijters & Markus Schaffner & Benno Torgler, 2013. "Expectation Formation in an Evolving Game of Uncertainty: Theory and New Experimental Evidence," QuBE Working Papers 022, QUT Business School.
    7. Pavlo Blavatskyy & Ganna Pogrebna, 2010. "Endowment effects? “Even” with half a million on the table!," Theory and Decision, Springer, vol. 68(1), pages 173-192, February.
    8. Blavatskyy, Pavlo R., 2012. "Utility of a quarter-million," Economics Letters, Elsevier, vol. 117(3), pages 650-653.
    9. Sjögren Lindquist, Gabriella & Säve-Söderbergh, Jenny, 2006. "Testing the rationality assumption using a design difference in the TV game show 'Jeopardy'," Working Paper Series 9/2006, Stockholm University, Swedish Institute for Social Research.
    10. Matthew Kelley & Robert Lemke, 2015. "Gender differences when subjective probabilities affect risky decisions: an analysis from the television game show Cash Cab," Theory and Decision, Springer, vol. 78(1), pages 153-170, January.
    11. Pavlo Blavatskyy & Ganna Pogrebna, 2008. "Risk Aversion when Gains are Likely and Unlikely: Evidence from a Natural Experiment with Large Stakes," Theory and Decision, Springer, vol. 64(2), pages 395-420, March.
    12. Deck, Cary & Lee, Jungmin & Reyes, Javier A. & Rosen, Christopher C., 2013. "A failed attempt to explain within subject variation in risk taking behavior using domain specific risk attitudes," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 1-24.
    13. Alessandro Bucciol & Luca Zarri, 2015. "Does Investors' Personality Influence their Portfolios?," Working Papers 03/2015, University of Verona, Department of Economics.
    14. Bucciol, Alessandro & Cavasso, Barbara & Zarri, Luca, 2015. "Social status and personality traits," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 245-260.
    15. Michael Daly & Liam Delaney & Séamus McManus, 2010. "Risk Attitudes as an Independent Predictor of Debt," Working Papers 201049, Geary Institute, University College Dublin.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:40:y:2008:i:1:p:41-52. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.