Abstract
We study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Using an experiment with online workers, we find that subjects choose the risky lottery rather than a sure payment significantly more often when responding to a choice list. This behavior can be rationalized by the interaction between nonexpected utility and the random incentive system, as suggested by Karni and Safra ().
| Original language | English |
|---|---|
| Pages (from-to) | 217-237 |
| Number of pages | 21 |
| Journal | Quantitative Economics |
| Volume | 10 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 2019 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:Copyright © 2019 The Authors.
Keywords
- C90
- C91
- D81
- D90
- Random incentive system
- certainty effect
- independence axiom
- isolation
- multiple price list
- preference reversals
- reduction of compound lotteries