Risk Attitudes of Children and Adults: Choices Over Small and Large Probability Gains and Losses
 William T. Harbaugh,
 Kate Krause,
 Lise Vesterlund
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In this paper we examine how risk attitudes change with age. We present participants from age 5 to 64 with choices between simple gambles and the expected value of the gambles. The gambles are over both gains and losses, and vary in the probability of the nonzero payoff. Surprisingly, we find that many participants are risk seeking when faced with highprobability prospects over gains and risk averse when faced with smallprobability prospects. Over losses we find the exact opposite. Children's choices are consistent with the underweighting of lowprobability events and the overweighting of highprobability ones. This tendency diminishes with age, and on average adults appear to use the objective probability when evaluating risky prospects.
 Title
 Risk Attitudes of Children and Adults: Choices Over Small and Large Probability Gains and Losses
 Journal

Experimental Economics
Volume 5, Issue 1 , pp 5384
 Cover Date
 20020601
 DOI
 10.1023/A:1016316725855
 Print ISSN
 13864157
 Online ISSN
 15736938
 Publisher
 Kluwer Academic Publishers
 Additional Links
 Topics
 Keywords

 probability weighting
 subjective expected utility
 prospect theory
 children
 risk
 Industry Sectors
 Authors

 William T. Harbaugh ^{(1)}
 Kate Krause ^{(2)}
 Lise Vesterlund ^{(3)}
 Author Affiliations

 1. University of Oregon and N.B.E.R, Eugene, Oregon, 974031285, USA
 2. University of New Mexico, Albuquerque, New Mexico, 871311101, USA
 3. University of Pittsburgh, Pittsburgh, PA, 15260, USA