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Variations in Individual Decision Making: Children, Adults, and Economic Theory

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  • Patricia C. Grieggs

Abstract

This study examines differences in individual decision making between children and adults using a paired lottery choice experiment. A lottery choice experiment involves selecting between two options, one with a small difference in payoffs and one with a large difference in payoffs, for each of ten decisions with increasing probability of obtaining the higher payoff. Based on subject decisions, risk preferences can be inferred. Particular attention is given to age and gender differences. The main result reveals that children choose significantly fewer “safe†lotteries than adults on average. Specifically, children act as risk-seeking in low winning percentage lotteries. There is no significant difference in safe choices between genders in both samples. These findings can prove to be an important asset when developing policies to curb hazardous behavior in children.

Suggested Citation

  • Patricia C. Grieggs, 2010. "Variations in Individual Decision Making: Children, Adults, and Economic Theory," The American Economist, Sage Publications, vol. 55(2), pages 124-135, November.
    • Handle: RePEc:sae:amerec:v:55:y:2010:i:2:p:124-135
    DOI: 10.1177/056943451005500213
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    References listed on IDEAS

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    1. William Harbaugh & Kate Krause & Lise Vesterlund, 2002. "Risk Attitudes of Children and Adults: Choices Over Small and Large Probability Gains and Losses," Experimental Economics, Springer;Economic Science Association, vol. 5(1), pages 53-84, June.
    2. Murnighan, J. Keith & Saxon, Michael Scott, 1998. "Ultimatum bargaining by children and adults," Journal of Economic Psychology, Elsevier, vol. 19(4), pages 415-445, August.
    3. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    4. repec:cup:judgdm:v:2:y:2007:i::p:225-233 is not listed on IDEAS
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