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Assessing Individual Risk Attitudes Using Field Data From Lottery Games

  • Connel Fullenkamp

    (Duke University)

  • Rafael Tenorio

    (DePaul University)

  • Robert Battalio

    (University of Notre Dame)

We use information from the television game show with the highest guaranteed average payoff in the United States, Hoosier Millionaire, to analyze risktaking in a high-stakes experiment. We characterize gambling decisions under alternative assumptions about contestant behavior and preferences, and derive testable restrictions on individual risk attitudes based on this characterization. We then use an extensive sample of gambling decisions to estimate distributions of risk-aversion parameters consistent with the theoretical restrictions and revealed preferences. We find that although most contestants display risk-averse preferences, the extent of the risk aversion implied by our estimates varies substantially with the stakes involved in the different decisions. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest.2003.85.1.218
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 85 (2003)
Issue (Month): 1 (February)
Pages: 218-226

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Handle: RePEc:tpr:restat:v:85:y:2003:i:1:p:218-226
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