EconPapers    
Economics at your fingertips  
 

Endowment effects in the risky investment game?

Stein Holden () and Mesfin Tilahun ()
Additional contact information
Mesfin Tilahun: Norwegian University of Life Sciences

Theory and Decision, 2022, vol. 92, issue 1, No 9, 259-274

Abstract: Abstract The risky investment game of Gneezy and Potters (Q J Econ 112(2):631–645, 1997) has been proposed as a simple tool to measure risk aversion in applied settings, especially attractive in settings where participants may have limited education. However, this game can produce a significant endowment effect (attached to the initial position), so that analysis of the behavior in this game should not be done in the Expected Utility Theory (EUT) framework. The paper illustrates this point, by showing that risk tolerance can be much higher when the initial endowment concerns a risky lottery.

Keywords: Risky investment game; Endowment effects; Loss aversion; Salient reference points; Field experiment; Ethiopia (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11238-021-09821-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:theord:v:92:y:2022:i:1:d:10.1007_s11238-021-09821-4

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

DOI: 10.1007/s11238-021-09821-4

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2023-02-01
Handle: RePEc:kap:theord:v:92:y:2022:i:1:d:10.1007_s11238-021-09821-4