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Consistency of Risk Preference Measures and the Role of Ambiguity: An Artefactual Field Experiment from China

Author

Listed:
  • Pan He

    (ETH Zurich)

  • Marcella Veronesi

    (Department of Economics (University of Verona))

  • Stefanie Engel

    (Institute for Environmental Decisions, ETH Zurich)

Abstract

A variety of measures have been developed to elicit individual risk preferences. How these measures perform in the field, in particular in developing countries with non-student subjects, is still an open question. We implement an artefactual field experiment in rural China to investigate (i) consistency across incentivised experimental risk measures, (ii) consistency in risk preferences elicitation between non-incentivised survey measures and incentivised experiments, and (iii) possible explanations for risk preference inconsistency across measures. We find that inconsistent risk preferences across survey and experimental measures may be explained by ambiguity preferences. In the survey, subjects may mix risk and ambiguity preferences.

Suggested Citation

  • 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.
    • Handle: RePEc:ver:wpaper:03/2016
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    References listed on IDEAS

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    4. Calvin Mudzingiri & Ur Koumba, 2021. "Eliciting Risk Preferences Experimentally versus Using a General Risk Question. Does Financial Literacy Bridge the Gap?," Risks, MDPI, vol. 9(8), pages 1-16, July.

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    More about this item

    Keywords

    risk preferences; ambiguity preferences; field experiments; socio-economic survey; China;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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