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Who Really Wants to be a Millionaire : Estimates of Risk Aversion from Game Show Data

  • Hartley, Roger

    (University of Manchester)

  • Lanot, Gauthier

    (Queen’s University,)

  • Walker, Ian

    (University of Warwick,)

SUMMARY This paper estimates the degree of risk aversion from one of the most popular TV gameshows ever. The format of the show is straightforward; it involves no strategic decision making; we have a large number of observations; and the prizes are cash, which is paid immediately and covers a large range: from £100 up to £1 million. We provide non‐parametric estimates of the utility function and then we test some parametric restrictions. We find that, although the restriction to CRRA utility is statistically rejected, a log function approximates the utility function quite well over a large range of potential winnings. Copyright © 2013 John Wiley & Sons, Ltd.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp719.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 719.

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Length: 47 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:wrk:warwec:719
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Web page: http://www2.warwick.ac.uk/fac/soc/economics/

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