Risk-loving bullies
Here is an interesting post on risk preferences and physical strength. Hat-tip: Marginal Revolution
Tag: Experimental
Risk Aversion in the Laboratory
Many experimental economists have been interested in measuring the level of risk aversion as well as the determinants of risk aversion. These studies often take place in a controlled, laboratory setting and designing an experiment which will elicit responses which are true to life is essential. In “Risk Aversion in the Laboratory,” Harrison and Rutström…
How to present your lottery in an economic experiment
How should you present a lottery to a subject of an economic experiment? Is a pie chart the best? What about a Holt & Laury style chart? I have compiled a document (“Lottery Presentation Styles“) to give you some suggestions.
Testing for Prudence
Many economists over time have tried to measure how risk averse (or risk loving) people are. For instance, some risk averse individuals would prefer having $40 for sure compared to playing a game where if the coin lands heads you get $100 and if the coin lands tails you get $0. Risk averse individuals are…
Revealed Preferences
Generally, economists believe that individuals are rational and make choices to maximize utility. How do you reconcile the fact that most people would prefer to own a Ferrari, but actually own a car like a Toyota Matrix? Once you take into account all aspects of this choice (including price) then the Toyota Matrix doesn’t look…