TITLE

Risk attitude elicitation using a multi-lottery choice task: Real vs. hypothetical incentives

AUTHOR(S)
Barreda-Tarrazona, Iván; Jaramillo-Gutérrez, Ainhoa; Navarro-Martínez, Daniel; Sabater-Grande, Gerardo
PUB. DATE
October 2011
SOURCE
Spanish Journal of Finance & Accounting / Revista Espanola de Fi;2011, Vol. 40 Issue 152, p613
SOURCE TYPE
Periodical
DOC. TYPE
Article
ABSTRACT
We present a bi-dimensional multi lottery choice task which can be used in order to elicit the agents' risk attitudes in financial environments. This task is implemented both with hypothetical and real monetary incentives in a between-subjects and a within-subjects experiment. We observe choices involving significantly lower risk aversion on aggregate when incentives are real. The differences grow with the stakes at play. We also obtain significant differences between hypothetical and real rewards in both utility weighting and probability weighting estimated parameters. We find that the use of hypothetical incentives in multi-lottery choice tasks for evaluating individual risk aversion can be misleading.
ACCESSION #
71974958

 

Share

Other Topics