Who really wants to be a millionaire? Estimates of risk aversion from gameshow data

Roger Hartley, Gauthier Lanot and Ian Walker
Additional contact information
Roger Hartley: University of Manchester, Manchester
Gauthier Lanot: Keele University, Staffs
Ian Walker: University of Warwick, Coventry

No 200607, Working Papers from Geary Institute, University College Dublin

Abstract: This paper analyses the behaviour of TV gameshow contestants to estimate risk aversion. We are able to show that the gameshow participants are broadly representative of the population as a whole. The gameshow has a number of features that makes it well suited for our analysis: the format is extremely straightforward, it involves no strategic decisionmaking, we have a large number of observations, and the prizes are cash and paid immediately, and cover a large range – from £100 up to £1 million. Even though the CRRA model is extremely restrictive we find that a coefficient or relative risk aversion which is close to unity fits the data across a wide range of wealth remarkably well.

Keywords: Risk aversion; gameshow (search for similar items in EconPapers)
JEL-codes: D81 C93 C23 (search for similar items in EconPapers)
Date: 2006-05-10
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http://www.ucd.ie/geary/publications/2006/GearyWp200607.pdf First version, 2006 (application/pdf)

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