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Heterogeneity in Risky Choice Behavior in a Broad Population

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  • von Gaudecker, H.M.
  • van Soest, A.H.O.

    (Tilburg University, School of Economics and Management)

  • Wengstrom, E.

Abstract

We analyse risk preferences using an experiment with real incentives in a representative sample of 1,422 Dutch respondents. Our econometric model incorporates four structural parameters that vary with observed and unobserved characteristics: Utility curvature, loss aversion, preferences towards the timing of uncertainty resolution, and the propensity to choose randomly rather than on the basis of preferences. We find that all four parameters contribute to explaining choice behaviour. The structural parameters are significantly associated with socio-economic variables, but it is essential to incorporate unobserved heterogeneity in each of them to match the rich variety of choice patterns in the data.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • von Gaudecker, H.M. & van Soest, A.H.O. & Wengstrom, E., 2009. "Heterogeneity in Risky Choice Behavior in a Broad Population," Other publications TiSEM 0a7cd309-3b66-441c-bf79-7, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:0a7cd309-3b66-441c-bf79-7dc8f1f6d8f8
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    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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