Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior

Sebastian Schneider and Matthias Sutter

No 2020_22, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: We use a novel method to elicit and measure higher order risk preferences (prudence and temperance) in an experiment with 658 adolescents. In line with theoretical predictions, we find that higher order risk preferences – particularly prudence – are strongly related to adolescents' field behavior, including their financial decision making, eco-friendly behavior, and health status, including addictive behavior. Most importantly, we show that dropping prudence and temperance from the analysis of students' field behavior would yield largely misleading conclusions about the relation of risk aversion to these domains of field behavior. Thus our paper puts previous work that ignored higher order risk preferences into an encompassing perspective and clarifies which orders of risk preferences can help understand field behavior of adolescents.

Keywords: Higher order risk preferences; prudence; temperance; risk aversion; field behavior; adolescents; health; addictive behavior; smartphone addiction; experiment (search for similar items in EconPapers)
JEL-codes: C93 D81 D91 J13 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hea and nep-upt
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http://www.coll.mpg.de/pdf_dat/2020_22online.pdf (application/pdf)

Related works:
Working Paper: Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior (2020)
Working Paper: Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior (2020)
Working Paper: Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2020_22

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