Certainty equivalent, risk attitudes and housing

Mateusz Tomal and Justyna Brzezicka

Applied Economics Letters, 2023, vol. 30, issue 18, 2576-2580

Abstract: The aim of this study was to explore risk attitudes towards gambles involving housing and money in gain and loss domains for different payoff values. The analysis relied on the main tenets of the prospect theory, and risk behaviours were inferred from certainty equivalents. The study included a lab-in-the-field experiment conducted on a sample of 250 residents of Warsaw (Poland). The respondents were risk-averse in the gain domain and risk-seeking in the loss domain. The estimates for money and housing differed significantly due to the higher utility of the latter.

Date: 2023
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DOI: 10.1080/13504851.2022.2099797

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