Investigating risk preferences using experiments

Ted O’Donoghue and Jason Somerville

Chapter 19 in Handbook of Experimental Methods in the Social Sciences, 2026, pp 592-632 from Edward Elgar Publishing

Abstract: Understanding the nature of risk preferences is a central topic in economics, and researchers often gather data through experiments to motivate and assess models of risk preferences. This chapter provides a reference guide for aspiring researchers who want to investigate risk preferences using experiments. In particular, we provide guidance on bridging the gap between theoretical models of risk preferences and experimental designs that inform those models. We focus on theory-driven research in which the goal is to estimate the parameters of a model of risk preferences or to test some property of risk preferences. For each objective, we describe how to design an experiment and conduct the subsequent analysis while ensuring clean identification of the feature of risk preferences of interest and being able to account for decision noise and heterogeneity. We also discuss some broader methodological and implementation issues.

Keywords: Risk Preferences; Experiments; Identification; Decision Noise; Heterogeneity (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035312627
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