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To pay or not to pay: Measuring risk preferences in lab and field

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  • Brañas-Garza, Pablo
  • Estepa-Mohedano, Lorenzo
  • Jorrat, Diego
  • Orozco, Victor
  • Rascón-Ramírez, Ericka

Abstract

Measuring risk preferences using monetary incentives is costly. In the field, it might be also unfair and unsafe. The commonly used measure of Holt and Laury (2002) relies on a dozen lottery choices and payments, which make it time consuming and expensive. It also raises moral concerns as a result of the unequal payments generated by good and bad luck. Paying some but not all subjects may also create tensions between the researcher and subjects. In a pre-registered study in Honduras, Nigeria and Spain, we use a short version of Holt and Laury where we address all three concerns. We find in the field that not paying at all or paying with and without probabilistic rules makes no difference. Our hypothetical and short version makes our measurement of risk cheaper, fairer and safer.

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  • Brañas-Garza, Pablo & Estepa-Mohedano, Lorenzo & Jorrat, Diego & Orozco, Victor & Rascón-Ramírez, Ericka, 2021. "To pay or not to pay: Measuring risk preferences in lab and field," Judgment and Decision Making, Cambridge University Press, vol. 16(5), pages 1290-1313, September.
    • Handle: RePEc:cup:judgdm:v:16:y:2021:i:5:p:1290-1313_7
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    5. Ortiz, Jose M. & Teixeira, Lucas I. & Falcão, Natália N.L. & Soki, Erika A. & Almeida, Raquel M., 2024. "Information simplification and default choices improve financial decisions: A credit card statement experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 110(C).
    6. Novella, Rafael & Ramirez, Ericka G. Rascón, 2024. "Question-order effects on judgements under uncertainty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 109(C).
    7. Kai Ruggeri & Amma Panin & Milica Vdovic & Bojana Većkalov & Nazeer Abdul-Salaam & Jascha Achterberg & Carla Akil & Jolly Amatya & Kanchan Amatya & Thomas Lind Andersen & Sibele D. Aquino & Arjoon Aru, 2022. "The globalizability of temporal discounting," Nature Human Behaviour, Nature, vol. 6(10), pages 1386-1397, October.
    8. Lovász, Anna & Bat-Erdene, Boldmaa & Cukrowska-Torzewska, Ewa & Rigó, Mariann & Szabó-Morvai, Ágnes, 2023. "Competition, subjective feedback, and gender gaps in performance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    9. Truc Thanh Tran & Nam Khanh Pham, 2024. "Risk Preferences and Entrepreneurial Decision-Making: Evidence from Experimental Methods in Vietnam," Sustainability, MDPI, vol. 16(11), pages 1-16, May.
    10. Pablo Brañas-Garza & Diego Jorrat & Antonio M. Espín & Angel Sánchez, 2023. "Paid and hypothetical time preferences are the same: lab, field and online evidence," Experimental Economics, Springer;Economic Science Association, vol. 26(2), pages 412-434, April.
    11. Alfonso-Costillo, Antonio, 2021. "Taking risks by flying paper airplanes," MPRA Paper 108541, University Library of Munich, Germany.
    12. Estepa-Mohedano, Lorenzo & Espinosa, María Paz, 2023. "Comparing risk elicitation in lotteries with visual or contextual aids," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).
    13. Antonio Alfonso & Pablo Brañas-Garza & Diego Jorrat & Benjamín Prissé & María José Vázquez-De Francisco, 2024. "The Baking of Preferences throughout the High School," Working Papers 316, Red Nacional de Investigadores en Economía (RedNIE).
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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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