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Exploring the consistency of higher-order risk preferences
Citation Link: https://doi.org/10.15480/882.4665
Publikationstyp
Journal Article
Date Issued
2019-10-07
Sprache
English
TORE-DOI
TORE-URI
Journal
Volume
61
Issue
1
Start Page
283
End Page
320
Citation
International Economic Review 61 (1): 283-320 (2020-02)
Publisher DOI
Scopus ID
Publisher
Wiley-Blackwell
This study measures higher order risk preferences and their consistency. We explore the role of country differences, the variation of stakes, and the framing of lotteries. We observe a robust dichotomous pattern of choice behavior in China, the United States, and Germany. The majority of choices are consistent with mixed risk aversion or mixed risk-loving behavior. We also find this pattern after a 10-fold increase in the stakes. Finally, our results reveal that this pattern is strengthened if the lotteries are displayed in compound instead of reduced form. In a follow-up study, we explore potential explanations for this framing effect.
DDC Class
330: Wirtschaft
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