Measuring Risk Attitudes in a Natural Experiment: Data from the Television Game Show Lingo

We use data from a television game show involving elementary lotteries as a natural experiment to measure risk attitudes. Unique features of our data set are the substantial monetary stakes and the large sample size. CRRA and CARA utility specifications perform approximately equally well. We find ro...

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Bibliographic Details
Published inThe Economic journal (London) Vol. 111; no. 474; pp. 821 - 848
Main Authors Beetsma, Roel M. W. J., Schotman, Peter C.
Format Journal Article
LanguageEnglish
Published Oxford, UK and Boston, USA Blackwell Publishers Ltd 01.10.2001
Blackwell Publishers
Oxford University Press
Subjects
Decision making
Decision making models
Decision theory
Economic models
Economic value
Expected utility
Experiments
Game shows
Game theory
Games
Lotteries
Natural experiments
Probability
Risk
Risk aversion
Risk theory
Studies
Television programs
Utility functions
Wealth
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Summary:We use data from a television game show involving elementary lotteries as a natural experiment to measure risk attitudes. Unique features of our data set are the substantial monetary stakes and the large sample size. CRRA and CARA utility specifications perform approximately equally well. We find robust evidence of substantial risk aversion. Extensions of the basic model, which allow for a separate utility flow purely from playing the game or for decisions based on decision weights instead of actual probabilities, raise the estimated degree of risk aversion.
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ISSN:0013-0133
1468-0297
DOI:10.1111/1468-0297.00661