Year: 2014
Type: preprint
Abstract: . We analyze the use of discrete choice models for the estimation of risk aversion and show a fundamental flaw in the standard random utility model which is commonly used in the literature. Specifically, we find that given two gambles, the probability of selecting the riskier gamble may be larger for larger levels of risk aver-sion. We characterize when this occurs. By contrast, we show that the alternative random preference approach is free of such problems.
Authors: José Apesteguía, Miguel Á. González Ballester
Language: English
Subfield: General Decision Sciences
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
Award: G5408281533
OpenAlex ID: W1485470579