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Risk aversion, prudence and temperance: an experiment in gain and loss

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  • Marielle Brunette

    () (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UL - Université de Lorraine - UNISTRA - Université de Strasbourg)

  • Julien Jacob

    () (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UL - Université de Lorraine - UNISTRA - Université de Strasbourg)

Abstract

We characterize the individual's attitude towards risk, prudence and temperance in the gain and loss domains. We analyze the links between the three features of preferences for a given domain and between domains for each feature of preferences. Consequently, the reflection effect, the mixed risk aversion and the risk apportionment, are key concepts of our study. We also display some determinants for risk aversion, prudence and temperance in each domain. To do this, we conducted a lab experiment with students eliciting risk aversion, prudence and temperance in the two domains, and collected information about each subject's characteristics.

Suggested Citation

  • Marielle Brunette & Julien Jacob, 2019. "Risk aversion, prudence and temperance: an experiment in gain and loss," Post-Print hal-02114762, HAL.
  • Handle: RePEc:hal:journl:hal-02114762
    DOI: 10.1016/j.rie.2019.04.004
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02114762
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    References listed on IDEAS

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    Cited by:

    1. Ivan Paya & David Peel & Konstantinos Georgalos, 2020. "On the Predictions of Cumulative Prospect Theory for Third and Fourth Order Preferences," Working Papers 293574809, Lancaster University Management School, Economics Department.

    More about this item

    Keywords

    determinant; risk aversion; prudence; temperance; experiment; correlations;

    JEL classification:

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

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