Estimating Risky Behavior with Multiple-Item Risk Measures
Lukas Menkhoff and
No 1608, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
We compare seven established risk elicitation methods and investigate how they robustly explain eleven kinds of risky behavior with 760 individuals. Risk measures are positively correlated; however, their performance in explaining behavior is heterogeneous and, therefore, difficult to assess ex ante. To close this knowledge gap, greater diversification across risk measures is helpful. We do, indeed, find that performance increases considerably if single-item risk measures are combined to form multiple-item risk measures. They tend to improve results the more single-item measures they contain and if these single-item risk measures have different framings. Interestingly, survey items perform as well as incentivized experimental items in explaining risky behavior.
Keywords: Risk; experiments; household survey; testing methods; contexts (search for similar items in EconPapers)
JEL-codes: C93 D81 O12 (search for similar items in EconPapers)
Pages: 64 p.
New Economics Papers: this item is included in nep-exp and nep-upt
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Journal Article: Estimating risky behavior with multiple-item risk measures (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1608
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