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Personality and the Consistency of Risk Taking Behavior: Experimental Evidence

Author

Listed:
  • Cary Deck

    (University of Arkansas and Economic Science Institute)

  • Jungmin Lee

    (Florida International University)

  • Javier Reyes

    (University of Arkansas)

Abstract

Researchers have found that an individual’s risk attitude is not stable across elicitation methods. Results reported by Deck et al. (2009) suggest that personality may help explain the apparent inconsistency, offering support to Borghans et al.’s (2008) argument that economists should consider a multi-domain approach to measuring risk attitudes. This paper uses laboratory methods to compare risk attitudes as measured by the Holt and Laury (2002) procedure under two different frames. We find that, as in Deck et al. (2009), one’s willingness to take financial risks (as measured by Weber et al. 2002) significantly affects behavior; however the effect is significantly greater when the task is framed as a financial decision. This paper also asks whether personality can explain the well documented behavioral difference between first price and Dutch auctions. While one’s gambling attitude (as measured by Weber et al. 2002) affects bidding behavior, it does not do so differentially between auction formats.

Suggested Citation

  • Cary Deck & Jungmin Lee & Javier Reyes, 2010. "Personality and the Consistency of Risk Taking Behavior: Experimental Evidence," Working Papers 10-17, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:10-17
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    File URL: http://www.chapman.edu/ESI/wp/Deck_PersonalityConsistencyRiskTaking.pdf
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    References listed on IDEAS

    as
    1. Paul J. H. Schoemaker, 1990. "Are Risk-Attitudes Related Across Domains and Response Modes?," Management Science, INFORMS, vol. 36(12), pages 1451-1463, December.
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    Citations

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    Cited by:

    1. Filippin, Antonio & Crosetto, Paolo, 2014. "A Reconsideration of Gender Differences in Risk Attitudes," IZA Discussion Papers 8184, Institute of Labor Economics (IZA).
    2. Jonathan Chapman & Mark Dean & Pietro Ortoleva & Erik Snowberg & Colin Camerer, 2017. "Willingness to Pay and Willingness to Accept are Probably Less Correlated Than You Think," NBER Working Papers 23954, National Bureau of Economic Research, Inc.
    3. repec:mth:jas888:v:6:y:2018:i:1:p:116-130 is not listed on IDEAS
    4. Paolo Crosetto & Antonio Filippin, 2016. "A theoretical and experimental appraisal of four risk elicitation methods," Experimental Economics, Springer;Economic Science Association, vol. 19(3), pages 613-641, September.
    5. Jana Cahlíková & Lubomír Cingl, 2017. "Risk preferences under acute stress," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 209-236, March.
    6. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    7. Jonathan Chapman & Mark Dean & Pietro Ortoleva & Erik Snowberg & Colin Camerer, 2021. "On the Relation between Willingness to Accept and Willingness to Pay," Working Papers 2021-90, Princeton University. Economics Department..
    8. Dennis Barber, 2015. "An experimental analysis of risk and entrepreneurial attitudes of university students in the USA and Brazil," Journal of International Entrepreneurship, Springer, vol. 13(4), pages 370-389, December.

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    More about this item

    Keywords

    Risk Attitudes; Personality; Auctions; Framing Effects; Laboratory Experiments;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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