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Small-scale changes in wealth and attitudes toward risk

Listed author(s):
  • Sergio Sousa

    ()

    (University of Nottingham)

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    This paper reports on an experiment designed to examine the effects of small-scale changes in wealth on risk attitudes. We find that the money given prior to risky choices does not induce a change of subjects' risk preferences. This result supports a key assumption in a recent literature over calibration critique of decision theories. Furthermore, as the money given to subjects in our experiment is administered in between risky tasks and framed as a reward rather than a windfall gain, our result suggests that experimental findings reporting that a prior monetary gain induces individuals to take more risks (house-money effect) may be more sensitive to prior experience with the risk-elicitation task or framing of the money than previously thought.

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    File URL: http://www.nottingham.ac.uk/cedex/documents/papers/2010-11.pdf
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    Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2010-11.

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    Date of creation: Jun 2010
    Handle: RePEc:not:notcdx:2010-11
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    School of Economics University of Nottingham University Park Nottingham NG7 2RD

    Phone: (44) 0115 951 5620
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    Web page: http://www.nottingham.ac.uk/economics/cedex/

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