Small stakes risk aversion in the laboratory: a reconsideration

Harrison, Glenn W.; Lau, Morten I.; Ross, Don; Swarthout, J. Todd

Small stakes risk aversion in the laboratory: a reconsideration

dc.contributor.author	Harrison, Glenn W.
dc.contributor.author	Lau, Morten I.
dc.contributor.author	Ross, Don
dc.contributor.author	Swarthout, J. Todd
dc.contributor.funder	Samfund og Erhverv, Det Frie Forskningsråd	en
dc.date.accessioned	2018-01-03T12:25:19Z
dc.date.available	2018-01-03T12:25:19Z
dc.date.issued	2017-08-19
dc.date.updated	2018-01-03T12:17:49Z
dc.description.abstract	Evidence of risk aversion in laboratory settings over small stakes leads to a priori implausible levels of risk aversion over large stakes under certain assumptions. One core assumption in statements of this calibration puzzle is that small-stakes risk aversion is observed over all levels of wealth, or over a â sufficiently largeâ range of wealth. Although this assumption is viewed as self-evident from the vast experimental literature showing risk aversion over laboratory stakes, it actually requires that lab wealth be varied for a given subject as one evaluates the risk attitudes of the subject. We consider evidence from a simple design that tests this assumption, and find that the assumption is strikingly rejected for a large sample of subjects from a population of college students. We conclude that the implausible predictions that flow from these assumptions do not apply to one specialized population widely used to study economic behavior in laboratory experiments.	en
dc.description.sponsorship	Samfund og Erhverv, Det Frie Forskningsråd (Project #12-130950)	en
dc.description.status	Not peer reviewed	en
dc.description.version	Submitted Version	en
dc.format.mimetype	application/pdf	en
dc.identifier.citation	Harrison, G. W., Lau, M. I., Ross, D. and Swarthout, J. T. (2017) 'Small stakes risk aversion in the laboratory: A reconsideration', Economics Letters, 160, pp. 24-28. doi:10.1016/j.econlet.2017.08.003	en
dc.identifier.doi	10.1016/j.econlet.2017.08.003
dc.identifier.endpage	28	en
dc.identifier.issn	0165-1765
dc.identifier.journaltitle	Economics Letters	en
dc.identifier.startpage	24	en
dc.identifier.uri	https://hdl.handle.net/10468/5216
dc.identifier.volume	160	en
dc.language.iso	en	en
dc.publisher	Elsevier B.V.	en
dc.rights	© 2017, the Authors. All rights reserved.	en
dc.subject	Risk aversion	en
dc.subject	Calibration puzzle	en
dc.subject	Laboratory experiments	en
dc.title	Small stakes risk aversion in the laboratory: a reconsideration	en
dc.type	Article (preprint)	en