Measurement of risk preference

Charles A. Holt

Chapter 4 in The Origins and Evolution of Experimental Economics, 2026, pp 47-68 from Edward Elgar Publishing

Abstract: One annoying impediment for setting up a controlled economics experiment with clearly specified money payoffs is that subjects’ risk preferences are typically unobserved. Risk aversion, for example, may cause the perceived value of a share dividend to be lower than its expected money value, as determined by the product of probabilities and possible dividend payouts. This chapter reviews the main methods for measuring risk preferences: the investment portfolio selection; the structured binary choice menu; and the bomb task. The chapter ends with a brief consideration of probability weighting issues associated with risk-preference measurement.

Keywords: Risk Aversion; Multiple Price List; Portfolio Choice Tasks; BRET Bomb Task (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035356256
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