Menu-dependent risk attitudes: Theory and evidence

Zhuo Chen (), Russell Golman () and Jason Somerville ()
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Zhuo Chen: Shandong University
Russell Golman: Carnegie Mellon University
Jason Somerville: Federal Reserve Bank of New York

Journal of Risk and Uncertainty, 2024, vol. 68, issue 1, No 4, 77-105

Abstract: Abstract We test for a novel pattern of menu-dependent risk attitudes that forms the basis of recent theories of risky choice: Does expanding the range of potential prizes from lotteries in a choice set lead people to overweight those prizes and make riskier choices? Contrary to our hypothesis, we find no evidence of such a menu effect. Varying the potential prize offered by an actuarially unfavorable, high-risk lottery does not affect the likelihood of choosing a different, moderate-risk gamble in favor of a safer alternative. Our well-powered null results cast doubt on prominent theories of menu-dependent risk preferences.

Keywords: Focusing; Menu Dependence; Risk Attitudes (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11166-023-09423-1

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