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To pay or not to pay: Measuring riskpreferences in lab and field

Author

Listed:
  • Pablo Brañas-Garza

    (Universidad Loyola)

  • Lorenzo Estepa Mohedano

    (Universidad Loyola)

  • Diego Jorrat

    (Universidad Loyola)

  • Victor Orozco

    (The World Bank)

  • Ericka Rascón Ramírez

    (Middlesex University London)

Abstract

Measuring risk preferences in the field is critical for policy, however, it can be expensive and maygenerate unequal payoffs due to bad luck. For instance, the commonly used measure of Holt andLaury (2002) relies on a dozen of lottery choices and payments which makes it time consuming andcostly, but also raises moral concerns as a result of the unequal payments generated by the lotteries.We propose a short version of the Holt and Laury (2002) which produces in the lab (Spain) thesame results as the long HL. Using the short HL in the field (Honduras and Nigeria), we observethat paying or not for the measurement of risk preferences produces the same findings. Our low-costapproach makes the measurement of risk preferences simpler, faster and cheaper in the lab and field.

Suggested Citation

  • Pablo Brañas-Garza & Lorenzo Estepa Mohedano & Diego Jorrat & Victor Orozco & Ericka Rascón Ramírez, 2021. "To pay or not to pay: Measuring riskpreferences in lab and field," Working Papers 67, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:67
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/2021-67.pdf
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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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