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Eliciting Risk Preferences using Choice Lists

Kneeland, TL; Freeman, D; Halevy, Y; (2019) Eliciting Risk Preferences using Choice Lists. Quantitative Economics , 10 (1) pp. 217-237. Green open access

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Abstract

We study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Using an experiment with online workers, we find that subjects choose the risky lottery rather than a sure payment significantly more often when responding to a choice list. This behavior can be rationalized by the interaction between non-expected utility and the random incentive system, as suggested by Karni and Safra (1987).

Type: Article
Title: Eliciting Risk Preferences using Choice Lists
Open access status: An open access version is available from UCL Discovery
Publisher version: http://qeconomics.org/ojs/index.php/qe/issue/view/...
Language: English
Additional information: This is an open access article under the terms of the Creative Commons Attribution‐NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes. https://creativecommons.org/licenses/by-nc/3.0/
Keywords: random incentive system, isolation, independence axiom, multiple price list, reduction of compound lotteries, preference reversals, certainty effect.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10058627
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