IDEAS home Printed from https://ideas.repec.org/p/exc/wpaper/2007-03.html
   My bibliography  Save this paper

Inconsistent Choices in Lottery Experiments: Evidence from Rwanda

Author

Listed:
  • Sarah Jacobson
  • Ragan Petrie

Abstract

Lottery experiments have been performed in many contexts to test theories of risk aversion and to measure risk preferences. People are typically offered a series of lotteries with increasing expected payoffs and variances. A person with a concave utility function should switch from risky bets to safer bets at some point and never switch back. Switching back implies preferences inconsistent with a concave utility function. Our experiment, conducted with a population of adults in Rwanda, presents respondents with a series of binary-choice lotteries over gains and losses. We observe that 54-55% of subjects made at least one inconsistent choice over gains or losses, and 7-13% made at least two inconsistent choices. This holds for both hypothetical and real lottery payoffs. Inconsistent choices were less common when stakes were higher, and women are more likely to be inconsistent. While risk aversion alone is not correlated with actual economic outcomes, such as membership in savings (tontines) and insurance groups and holding a larger number of bank accounts, inconsistency is.

Suggested Citation

  • Sarah Jacobson & Ragan Petrie, 2007. "Inconsistent Choices in Lottery Experiments: Evidence from Rwanda," Experimental Economics Center Working Paper Series 2007-03, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:exc:wpaper:2007-03
    as

    Download full text from publisher

    File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2007-03.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kerri Brick & Martine Visser & Justine Burns, 2012. "Risk Aversion: Experimental Evidence from South African Fishing Communities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 133-152.
    2. Toritseju Begho & Kelvin Balcombe, 2023. "Attitudes to Risk and Uncertainty: New Insights From an Experiment Using Interval Prospects," SAGE Open, , vol. 13(3), pages 21582440231, July.
    3. Lopera, Maria Adelaida & Marchand, Steeve, 2018. "Peer effects and risk-taking among entrepreneurs: Lab-in-the-field evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 182-201.
    4. Morone, Andrea & Temerario, Tiziana, 2015. "Eliciting Preferences Over Risk: An Experiment," MPRA Paper 68519, University Library of Munich, Germany.
    5. Prasad, Kislaya & Salmon, Timothy C., 2013. "Self Selection and market power in risk sharing contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 71-86.
    6. Temerario, Tiziana, 2014. "Individual and Group Behaviour Toward Risk: A Short Survey," MPRA Paper 58079, University Library of Munich, Germany.
    7. Alberto E. Chong & David A. Fleming & Hernán D. Bejarano, 2011. "Trust and Trustworthiness in the Aftermath of Natural Disasters: Experimental Evidence from the 2010 Chilean Earthquake," Working Papers 2011-15, The George Washington University, Institute for International Economic Policy.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:exc:wpaper:2007-03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: J. Todd Swarthout (email available below). General contact details of provider: https://edirc.repec.org/data/exgsuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.