Risk Aversion Relates to Cognitive Ability: Preferences Or Noise?

Ola Andersson, Hakan Holm, Jean-Robert Tyran and Erik Wengström

Journal of the European Economic Association, 2016, vol. 14, issue 5, 1129-1154

Abstract: Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation may be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making rather than to risk preferences.

JEL-codes: C81 D12 D81 D91 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (128)

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Journal Article: RISK AVERSION RELATES TO COGNITIVE ABILITY: PREFERENCES OR NOISE? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:14:y:2016:i:5:p:1129-1154.

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