The predictive power of risk elicitation tasks

Michele Garagnani

No 362, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This work reports an online experiment with a general-population sample examining the performance of budget-choice tasks for elicitation of risk attitudes. First, I compare the investment task of Gneezy and Potters (1997) with the standard choicelist method of Holt and Laury (2002), and evaluate their performance in terms of the number of correctly-predicted binary decisions in a set of out-of-sample lottery choices. There are no significant differences between the tasks in this sense, and performance is modest. Second, I included three additional budget-choice tasks (selection of a lottery from a linear budget set) where optimal decisions should have been corner solutions, and find that a large majority of participants provided interior solutions instead, casting doubts on subjects’ understanding of tasks of this type.

Keywords: Risk preferences; elicitation methods; budget sets; portfolio Choices (search for similar items in EconPapers)
JEL-codes: C83 C91 D81 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The predictive power of risk elicitation tasks (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:362

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