Within-Subject Intra- and Inter-Method Consistency of Two Experimental Risk Attitude Elicitation Methods

Abstract

Abstract. We compare the consistency of choices in two methods used to elicit risk preferences on an aggregate as well as on an individual level. We ask subjects to choose twice from a list of nine decisions between two lotteries, as introduced by Laury (2002, 2005) alternating with nine decisions using the budget approach introduced by Andreoni and Harbaugh (2009). We find that, while on an aggregate (subject pool) level the results are consistent, on an individual (within-subject) level, behaviour is far from consistent. Within each method as well as across methods we observe low (simple and rank) correlations.JEL classification: C91, D81.

Temporal Stability, Cross-Validity, and External Validity of Risk Preferences Measures: Experimental Evidence from a UK Representative Sample

“…From this perspective, our systematic study with a representative sample of the UK population adds to the mixed evidence on the cross-validity and external validity of different experimental measures of risk preferences (Isaac and James, 2000;Anderson and Mellor, 2009;Dave et al, 2010;Reynaud and Couture, 2012;Deck et al, 2013;Dulleck et al, 2013;Loomes and Pogrebna, 2014;Crosetto and Filippin, 2015;Vieider et al, 2015b;Attanasi et al, 2016). Caution should thus be in order when using one specific risk preferences measure to draw conclusions about the various, inevitably multifaceted, dimensions of individual risk-taking in different contexts, especially for representative samples of the population that, unlike conventional student subjects, are highly heterogeneous.…”

“…Loomes and Pogrebna (2014) compare responses to the AT, B-EG, and HL tasks and find no correlation between any of them. Further evidence of imperfectly mapping responses across different methods to measure risk preferences in student samples has also been provided by Isaac and James (2000), Anderson and Mellor (2009), Reynaud and Couture (2012), Dulleck et al (2013), Vieider et al (2015b), and Attanasi et al (2016) using a within-subject design, and by Crosetto and Filippin (2013) using a between-subject design. Dave et al (2010) consider a general population sample in Canada, and compare responses across the B-EG and HL methods using experimental tasks that are similar to the ones we use: they find significantly higher risk aversion in the HL than in the B-EG task.…”

How to Reveal People's Preferences: Comparing Time Consistency and Predictive Power of Multiple Price List Risk Elicitation Methods

“…Bleichrodt (2002) argues that a potential reason for these differences might be attributed to the fact that the original method by Eckel and Grossman (2008) does not cover the risk seeking domain, which can be included with the slight modification we made when incorporating this method. Dulleck et al (2015) test the method devised by Andreoni and Harbaugh (2010) using a graphical representation against the PGp and describe both a surprisingly high level of within-and inter-method inconsistency. Lusk (2012, 2016) compare the PGp method to a modified version of it where probabilities are held constant.…”

How to reveal people’s preferences: Comparing time consistency and predictive power of multiple price list risk elicitation methods

“…Bleichrodt (2002) argues that a potential reason for these differences might be attributed to the fact that the original method by Eckel and Grossman (2008) does not cover the risk seeking domain, which can be included with the slight modification we made when incorporating this method. Dulleck et al (2015) test the method devised by Andreoni and Harbaugh (2010) using a graphical representation against the PGp and describe both a surprisingly high level of within- and inter-method inconsistency. Drichoutis and Lusk (2012, 2016) compare the PGp method to a modified version of it where probabilities are held constant.…”