Understanding the order effect in eliciting risk aversion

Kitae Sohn

Finance Research Letters, 2019, vol. 30, issue C, 314-317

Abstract: Economists have found the order effect in eliciting risk aversion but have failed to explain it. We analyzed a nationally representative Indonesian dataset with a large sample size (13,669 men and 15,590 women) by exploiting the randomized ordering of two sets of questions regarding risk preferences. Probit models, multinomial probit models, and interval regressions were applied. Both men and women became more risk tolerant after they responded to either set of questions. The results are consistent with a well-known phenomenon in psychology: familiarity produces the illusion of control and enhances confidence in oneself.

Keywords: Order effect; Risk aversion; Randomization; Indonesia (search for similar items in EconPapers)
JEL-codes: C9 D81 D91 O53 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612318304616
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:30:y:2019:i:c:p:314-317

DOI: 10.1016/j.frl.2018.10.014

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().