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Within-subject Intra- and Inter-method consistency of two experimental risk attitude elicitation

Author

Listed:
  • Uwe Dulleck

    (QUT)

  • Jacob Fell

    (The commonwealth Grants Commission)

  • Jonas Fooken

    (QUT)

Abstract

We compare the consistency of choices in two methods to used elicit risk preferences on an aggregate as well as on an individual level. We asked subjects to choose twice from a list of nine decision between two lotteries, as introduced by Holt and Laury (2002, 2005) alternating with nine decisions using the budget approach introduced by Andreoni and Harbaugh (2009). We find that while on an aggregate (subject pool) level the results are (roughly) consistent, on an individual (within-subject) level, behavior is far from consistent. Within each method as well as across methods we observe low correlations. This again questions the reliability of experimental risk elicitation measures and the ability to use results from such methods to control for the risk aversion of subjects when explaining effects in other experimental games.

Suggested Citation

  • Uwe Dulleck & Jacob Fell & Jonas Fooken, 2011. "Within-subject Intra- and Inter-method consistency of two experimental risk attitude elicitation," NCER Working Paper Series 74, National Centre for Econometric Research.
    • Handle: RePEc:qut:auncer:2011_5
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    File URL: http://www.ncer.edu.au/papers/documents/WPNo74.pdf
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    References listed on IDEAS

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    1. Jan-Erik Lönnqvist & Markku Verkasalo & Gari Walkowitz & Philipp C. Wichardt, 2011. "Measuring Individual Risk Attitudes in the Lab: Task or Ask?: An Empirical Comparison," SOEPpapers on Multidisciplinary Panel Data Research 370, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Loomes, Graham & Moffatt, Peter G & Sugden, Robert, 2002. "A Microeconometric Test of Alternative Stochastic Theories of Risky Choice," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 103-130, March.
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    4. John Hey & Andrea Morone & Ulrich Schmidt, 2009. "Noise and bias in eliciting preferences," Journal of Risk and Uncertainty, Springer, vol. 39(3), pages 213-235, December.
    5. Lisa Anderson & Jennifer Mellor, 2009. "Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure," Journal of Risk and Uncertainty, Springer, vol. 39(2), pages 137-160, October.
    6. Steffen Andersen & Glenn Harrison & Morten Lau & E. Rutström, 2009. "Elicitation using multiple price list formats," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 365-366, September.
    7. Ben Greiner, 2004. "The Online Recruitment System ORSEE 2.0 - A Guide for the Organization of Experiments in Economics," Working Paper Series in Economics 10, University of Cologne, Department of Economics.
    8. Ben Greiner, 2004. "The Online Recruitment System ORSEE - A Guide for the Organization of Experiments in Economics," Papers on Strategic Interaction 2003-10, Max Planck Institute of Economics, Strategic Interaction Group.
    9. Isaac, R Mark & James, Duncan, 2000. "Just Who Are You Calling Risk Averse?," Journal of Risk and Uncertainty, Springer, vol. 20(2), pages 177-187, March.
    10. Ballinger, T Parker & Wilcox, Nathaniel T, 1997. "Decisions, Error and Heterogeneity," Economic Journal, Royal Economic Society, vol. 107(443), pages 1090-1105, July.
    11. Chetan Dave & Catherine Eckel & Cathleen Johnson & Christian Rojas, 2010. "Eliciting risk preferences: When is simple better?," Journal of Risk and Uncertainty, Springer, vol. 41(3), pages 219-243, December.
    12. Glenn W. Harrison & Eric Johnson & Melayne M. McInnes & E. Elisabet Rutström, 2005. "Risk Aversion and Incentive Effects: Comment," American Economic Review, American Economic Association, vol. 95(3), pages 897-901, June.
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    Citations

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    Cited by:

    1. Pan He & Marcella Veronesi & Stefanie Engel, 2016. "Consistency of Risk Preference Measures and the Role of Ambiguity: An Artefactual Field Experiment from China," Working Papers 03/2016, University of Verona, Department of Economics.
    2. Galizzi, Matteo M. & Machado, Sara R. & Miniaci, Raffaele, 2016. "Temporal stability, cross-validity, and external validity of risk preferences measures: experimental evidence from a UK representative sample," LSE Research Online Documents on Economics 67554, London School of Economics and Political Science, LSE Library.
    3. Jan-Erik Lönnqvist & Markku Verkasalo & Gari Walkowitz & Philipp C. Wichardt, 2011. "Measuring Individual Risk Attitudes in the Lab: Task or Ask?: An Empirical Comparison," SOEPpapers on Multidisciplinary Panel Data Research 370, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Adam Eric Greenberg, 2013. "When imagining future wealth influences risky decision making," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(3), pages 268-277, May.
    5. Jonas Fooken & Markus Schaffner, 2013. "The role of psychological and physiological factors in decision making under risk and in a dilemma," QuBE Working Papers 010, QUT Business School.
    6. Andersson, Ola & Tyran, Jean-Robert & Wengström, Erik & Holm, Håkan J., 2013. "Risk Aversion Relates to Cognitive Ability: Fact or Fiction?," Working Paper Series 964, Research Institute of Industrial Economics.
    7. repec:cup:judgdm:v:8:y:2013:i:3:p:268-277 is not listed on IDEAS

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    More about this item

    Keywords

    risk preferences; laboratory experiment; elicitation methods; subject heterogeneity;
    All these keywords.

    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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