Experimental Economics

, Volume 5, Issue 1, pp 53–84

Risk Attitudes of Children and Adults: Choices Over Small and Large Probability Gains and Losses

  • William T. Harbaugh
  • Kate Krause
  • Lise Vesterlund

DOI: 10.1023/A:1016316725855

Cite this article as:
Harbaugh, W.T., Krause, K. & Vesterlund, L. Experimental Economics (2002) 5: 53. doi:10.1023/A:1016316725855


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 non-zero payoff. Surprisingly, we find that many participants are risk seeking when faced with high-probability prospects over gains and risk averse when faced with small-probability prospects. Over losses we find the exact opposite. Children's choices are consistent with the underweighting of low-probability events and the overweighting of high-probability ones. This tendency diminishes with age, and on average adults appear to use the objective probability when evaluating risky prospects.

probability weightingsubjective expected utilityprospect theorychildrenrisk

Copyright information

© Kluwer Academic Publishers 2002

Authors and Affiliations

  • William T. Harbaugh
    • 1
  • Kate Krause
    • 2
  • Lise Vesterlund
    • 3
  1. 1.University of Oregon and N.B.E.REugeneUSA
  2. 2.University of New MexicoAlbuquerqueUSA
  3. 3.University of PittsburghPittsburghUSA