Inducing risk preferences in economics experiments

Ian Dobbs () and Anthony D. Miller

Applied Economics Letters, 2012, vol. 19, issue 7, 657-660

Abstract: A common procedure in experiments is to use binary lotteries to induce in all subjects pre-specified risk preferences. The validity of this procedure has been established only for a subject performing a single task, yet the procedure is normally applied in multi-task settings. This article formally analyses the multi-task case and establishes necessary and sufficient conditions relating to experimental design. New guidance is provided for the design of experiments involving interdependent tasks.

Date: 2012
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DOI: 10.1080/13504851.2011.593493

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