Eliciting risk preferences: When is simple better?

Abstract

Risk aversion, Experiments, Elicitation methods, Heterogeneity, C90, C81,

Risk, Loss, and Ambiguity Aversion after a Natural Disaster

“…These variables are introduced to control for other factors that may 8 Specifically, 37 in the risk aversion task, and 32 each in the ambiguity and loss aversion tasks. The percentage dropped due to non-monotonic switching is consistent with other studies (for example, 13.2% using university students in Holt and Laury (2002) and 8.5% using Canadian adults in Dave et al (2010)). -$2.00 with 50% chance $5.00 with 50% chance $0.00 for sure 3 -$3.00 with 50% chance $5.00 with 50% chance $0.00 for sure 4 -$4.00 with 50% chance $5.00 with 50% chance $0.00 for sure 5 -$5.00 with 50% chance $5.00 with 50% chance $0.00 for sure 6 -$6.00 with 50% chance $5.00 with 50% chance $0.00 for sure 7 -$7.00 with 50% chance $5.00 with 50% chance $0.00 for sure 8 -$8.00 with 50% chance $5.00 with 50% chance $0.00 for sure 9 -$9.00 with 50% chance $5.00 with 50% chance $0.00 for sure 10 -$10.00 with 50% chance $5.00 with 50% chance $0.00 for sure influence risk preferences.…”

Risk aversion and physical prowess: Prediction, choice and bias

“…The use of only 50/50 gambles is designed to keep the task as simple as possible; expected payoffs are easy to calculate, and expected payoff is linear in risk. Dave et al (2010) compare this method for measuring risk aversion with a more complex method that produces a finer grid on preferences, and show that this method produces fewer errors with little sacrifice in accuracy for most populations. This protocol is also similar to recent adaptations of the method developed by Binswanger (1981).…”

Eliciting risk-preferences in socio-economic surveys: How do different measures perform?

“…Despite the vast literature evaluating the performance of different instruments (e.g. Deck et al, 2009;Anderson and Mellor, 2009;Dave et al, 2010;Reynaud and Couture, * Tel. : +49 89 38602 360; fax: +49 89 38602 390.…”