Exposure to Risk and Risk Aversion: A Laboratory Experiment

Tai-Sen He and Fuhai Hong
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Tai-Sen He: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.
Fuhai Hong: Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.

No 1403, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: We examine whether prior exposure to environments with a varying degree of risk affects individuals’ risk-taking behavior. Using a laboratory experiment, we find that subjects exposed to a high risk environment exhibit higher levels of risk aversion than those who were exposed to a moderate or low risk environment. This effect is not driven by subjects’ realized outcomes from the risk. The finding has implications for theoretical models of decision-making under uncertainty, and can speak to a few current policy debates.

Keywords: Risk; Risk Aversion; Laboratory Experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2014-04
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-sea and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:1403

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