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An Empirical Investigation of the Assumptions of Risk-Value Models

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  • John Butler
  • James Dyer
  • Jiammin Jia

Abstract

Do participants make decisions consistent with risk-value tradeoffs? One hundred and five undergraduate business students made risk and preference judgments about lottery pairs in a series of paper surveys. The data indicate that the participants’ responses were generally consistent with the key assumptions of risk-value models, but that some extensions of the theory would improve this consistency. In particular, we find that modifying the risk assumptions of the risk-value theory so they are consistent the concept of the reflection of the risk attitude in the domains of gains and losses increases the agreement between the theory and the participants’ responses. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • John Butler & James Dyer & Jiammin Jia, 2005. "An Empirical Investigation of the Assumptions of Risk-Value Models," Journal of Risk and Uncertainty, Springer, vol. 30(2), pages 133-156, January.
    • Handle: RePEc:kap:jrisku:v:30:y:2005:i:2:p:133-156
    DOI: 10.1007/s11166-005-6562-8
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    References listed on IDEAS

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    3. Dennis Vrecko & Alexander Klos & Thomas Langer, 2009. "Impact of Presentation Format and Self-Reported Risk Aversion on Revealed Skewness Preferences," Decision Analysis, INFORMS, vol. 6(2), pages 57-74, June.

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