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Gender and Risk Aversion: Evidence from a Natural Experiment

Author

Listed:
  • Luís Pacheco

    (REMIT—Research on Economics, Management and Information Technologies, Universidade Portucalense, Rua Dr. António Bernardino de Almeida, 541-619, 4200-072 Porto, Portugal)

  • Júlio Lobão

    (School of Economics and Management and CEF.UP, University of Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal)

  • Sílvia Coelho

    (School of Economics and Management, University of Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal)

Abstract

The theoretical literature on risk aversion and Expected Utility Theory is extensive; however, the analysis of this behaviour with natural experiments could be more comprehensive. In this paper, we use data from 120 episodes of the Portuguese version of the TV game show The Price is Right , namely from The Wheel game, to explore risk aversion as well as the impact of gender in decision-making. The Wheel game has straightforward rules and huge expected payoffs. All contestants have access to the same information and distributions of uncertainty, making it a unique field laboratory to conduct an experimental test of rational decision theory. The objective is to infer the risk aversion levels of decision-makers from their choice to turn the wheel and the influence of gender on risk attitudes. There is a widespread view that women are more risk-averse than men. However, we could not reject the hypothesis that women and men have the same level of risk aversion. Nevertheless, we have evidence that contestants are more risk-averse than risk-seeking. The omission bias, loss aversion and regret can explain that behaviour.

Suggested Citation

  • Luís Pacheco & Júlio Lobão & Sílvia Coelho, 2023. "Gender and Risk Aversion: Evidence from a Natural Experiment," Games, MDPI, vol. 14(3), pages 1-16, June.
    • Handle: RePEc:gam:jgames:v:14:y:2023:i:3:p:49-:d:1170543
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    References listed on IDEAS

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