Joint measurement of risk aversion, prudence and temperance
We propose a method to measure the intensity of risk aversion, prudence (downside risk aversion) and temperance (outer risk aversion) in experiments. Higher-order risk compensations are defined within the proper risk apportionment model of Eeckhoudt and Schlesinger [American Economic Review, 96 (200...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Bonn
Graduate School of Economics
2010
|
| Series: | Bonn econ discussion papers
20/2010 |
| In: |
Bonn Econ Discussion Papers (2010,20)
|
| Subjects: | |
| Online Access: | Verlag, Volltext: http://www.bgse.uni-bonn.de/bonn-econ-papers-1/archive/2010/sebastian-ebert-and-daniel-wiesen-joint-measurement-of-risk-aversion-prudence-and-temperance-no.-20-2010-1 Download aus dem Internet, Stand: 30.05.2011, Volltext: http://hdl.handle.net/10419/71891 
|
| Author Notes: | by Sebastian Ebert and Daniel Wiesen |
| Summary: | We propose a method to measure the intensity of risk aversion, prudence (downside risk aversion) and temperance (outer risk aversion) in experiments. Higher-order risk compensations are defined within the proper risk apportionment model of Eeckhoudt and Schlesinger [American Economic Review, 96 (2006) 280] that are elicited using a multiple price list format. This approach is not based on expected utility theory. In our experiment we find evidence for risk aversion, prudence and temperance. Women demand higher risk compensations for all orders. The highest compensation is demanded for taking downside risk, not for being (second order) risk-loving. This highlights the importance of prudence when considering economic decisions under risk. -- Decision making under risk ; laboratory experiment ; prudence ; risk aversion ; temperance ; gender differences |
|---|---|
| Physical Description: | Online Resource |
| Format: | Systemvoraussetzungen: Acrobat Reader. |