Work

On the consistency of the individual behavior when facing higher-order risk attitudes

Year: 2022

Type: article

Abstract: We propose and analyze three procedures to elicit participants’ behavior regarding their higher-order risk attitudes. Our procedures relax the rigidity of having to choose among only two alternatives (as usual in the literature), and allow for choosing a third or even a fourth alternative. This way, the remaining choices for the two original alternatives carry lower levels of noise, i.e., lower randomness in behavior from the subjects without a strong preference in the binary setting, that are forced to choose among only two alternatives. Although the proposed procedures only filter out a small proportion of the choices, the effect on the consistency of the individual behavior across moments is highly significant.

Source: Finance research letters

DOI: 10.1016/j.frl.2022.103270

Authors: Annarita Colasante, Jaume García-Segarra, Luca Riccetti, Alberto Russo

Institutions: Unitelma Sapienza University, Sapienza University of Rome, Universitat Jaume I, University of Macerata, Marche Polytechnic University

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,270

Funders: Generalitat Valenciana, Universitat Jaume I