Revisiting risk aversion: Can risk preferences change with experience?

Eyal Ert, Ernan Haruvy*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

The Holt–Laury measure for risk aversion has been used extensively in economic studies to measure individuals’ risk aversion. The idea behind this measure is that individuals have stable risk preferences when making decisions under risk. We show that having repeated experiences with the Holt–Laury task can move individuals from exhibiting “risk aversion” to displaying “risk neutrality.” This finding suggests that either risk preferences are not robust to a few experiences or that responses to the tasks indicate something else. We show that a simple model of adaptation can capture this behavioral pattern.

Original languageAmerican English
Pages (from-to)91-95
Number of pages5
JournalEconomics Letters
Volume151
DOIs
StatePublished - 1 Feb 2017

Bibliographical note

Publisher Copyright:
© 2016 Elsevier B.V.

Keywords

  • Experiment
  • Learning
  • Risk aversion

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