Drichoutis, Andreas and Lusk, Jayson (2012): What can multiple price lists really tell us about risk preferences?
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Multiple price lists have emerged as a simple and popular method for eliciting risk preferences. Despite their popularity, a key downside of multiple price lists has not been widely recognized - namely that the approach is unlikely to generate sufficient information to accurately identify different dimensions of risk preferences. The most popular theories of decision making under risk posit that preference for risk are driven by a combination of two factors: the curvature of the utility function and the extent to which probabilities are weighted non-linearly. In this paper, we show that the widely used multiple price list introduced by Holt and Laury (2002) is likely more accurate at eliciting the latter, and we introduce a different multiple price list that is likely more accurate at eliciting the former. We show that by combining information from different multiple price lists, greater predictive performance can be achieved.
|Item Type:||MPRA Paper|
|Original Title:||What can multiple price lists really tell us about risk preferences?|
|Keywords:||expected utility theory; experiment; multiple price list; probability weighting; rank dependent utility; risk|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
|Depositing User:||Andreas Drichoutis|
|Date Deposited:||22. Oct 2012 13:16|
|Last Modified:||13. Feb 2013 20:38|
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Available Versions of this Item
Risk preference elicitation without the confounding effect of probability weighting. (deposited 30. Mar 2012 20:32)
Risk preference elicitation without the confounding effect of probability weighting. (deposited 31. Mar 2012 22:30)
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- Risk preference elicitation without the confounding effect of probability weighting. (deposited 31. Mar 2012 22:30)