Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure

We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of i...

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Bibliographic Details
Published inJournal of risk and uncertainty Vol. 39; no. 2; pp. 137 - 160
Main Authors Anderson, Lisa R, Mellor, Jennifer M
Format Journal Article
LanguageEnglish
Published Boston Boston : Springer US 01.10.2009
Spring Science + Business Media
Springer US
Springer Nature B.V
Subjects
Auctions
Behavior
Cash
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Environmental Economics
Experiments
Investment risk
Laboratories
Lotteries
Microeconomics
Musical intervals
Operations Research/Decision Theory
Polls & surveys
Preferences
Public companies
Regression analysis
Research methods
Risk
Risk assessment
Risk aversion
Risk aversion preference
Risk preferences
Studies
Survey responses
Surveys
Uncertainty
Survey
Risk preferences
D8
Laboratory experiment
C9
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Summary:We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models subjects' risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.
Bibliography:http://dx.doi.org/10.1007/s11166-009-9075-z
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ISSN:0895-5646
1573-0476
DOI:10.1007/s11166-009-9075-z