Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure
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We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models subjects’ risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.
KeywordsRisk preferences Laboratory experiment Survey
JEL ClassificationC9 D8
This research was supported by the Schroeder Center for Healthcare Policy at the Thomas Jefferson Program in Public Policy at the College of William & Mary. The authors are grateful for valuable research assistance from Nathan Koch, Matthew Altamura, and Jennifer Kessler.
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