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Eliciting individual risk attitudes – different procedures, different findings

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  • Gruener, Sven
  • Hirschauer, Norbert
  • Krüger, Felix

Abstract

We compare three procedures for eliciting individual risk attitudes: Holt-and-Laury (2002), Eckel-and-Grossman (2002), and the general willingness-to-take-risks question of the German socio-economic panel (Dohmen et al. 2011). Using a within-subject design, we carry out a classroom experiment with students who are enrolled in the degree programs Physics, Computer Sciences, Agricultural Sciences, Law, and History. We find that the risk attitudes as measured by the three procedures diverge substantially. This poses a serious challenge to the validity of these measurement instruments. Reconnoitering the room for improvement in the elicitation of risk atti-tudes, we discuss potential reasons for this divergence such as flawed design, overhasty interpretations, and confusion on the conceptual level.

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  • Gruener, Sven & Hirschauer, Norbert & Krüger, Felix, 2018. "Eliciting individual risk attitudes – different procedures, different findings," SocArXiv 7bwyq, Center for Open Science.
    • Handle: RePEc:osf:socarx:7bwyq
    DOI: 10.31219/osf.io/7bwyq
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    References listed on IDEAS

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    1. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Monash Economics Working Papers archive-03, Monash University, Department of Economics.
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    4. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
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    6. Norbert Hirschauer & Oliver Musshoff & Syster C. Maart-Noelck & Sven Gruener, 2014. "Eliciting risk attitudes -- how to avoid mean and variance bias in Holt-and-Laury lotteries," Applied Economics Letters, Taylor & Francis Journals, vol. 21(1), pages 35-38, January.
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