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Active and Passive Risk-Taking

Author

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  • Christian König-Kersting
  • Johannes Lohse
  • Anna Louisa Merkel

Abstract

Risk-taking may depend on whether risks result from an action (active risk-taking) or from not taking action (passive risk-taking). We develop a new experimental risk-elicitation procedure, the Dynamic Lottery Adjustment Task, and employ it across two separate experiments to study the size and direction of potential mode-of-choice effects (i.e. differences in risk-taking between active and passive decision modes). While our tightly controlled lab study provides little evidence for such effects, we find substantial evidence for mode-of-choice effects when decisions are spread out over 10 days and attention costs are a key feature of the online choice environment we use.

Suggested Citation

  • Christian König-Kersting & Johannes Lohse & Anna Louisa Merkel, 2020. "Active and Passive Risk-Taking," Working Papers 2020-04, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2020-04
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    References listed on IDEAS

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    Cited by:

    1. Ruty Keinan & Tali Idan & Yoella Bereby-Meyer, 2021. "Compliance with COVID-19 prevention guidelines: Active vs. passive risk takers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(1), pages 20-35, January.
    2. Kirchkamp, Oliver & Oechssler, Joerg & Sofianos, Andis, 2021. "The Binary Lottery Procedure does not induce risk neutrality in the Holt & Laury and Eckel & Grossman tasks," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 348-369.

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    More about this item

    Keywords

    risk-taking; mode-of-choice; passive decision making; attention costs;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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