Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory?

Gary Charness, Thomas Garcia, Theo Offerman () and Marie Claire Villeval
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Theo Offerman: CREED and Tinbergen Institute, University of Amsterdam, Amsterdam, Netherlands

No 1921, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We consider the external validity of laboratory measures of risk attitude. Based on a large-scale experiment using a representative panel of the Dutch population, we test if these measures can explain two different types of behavior: (i) behavior in laboratory risky financial decisions, and (ii) behavior in naturally-occurring field behavior under risk (financial, health and employment decisions). We find that measures of risk attitude are related to behavior in laboratory financial decisions and the most complex measures are outperformed by simpler measures. However, measures of risk attitude are not related to risk-taking in the field, calling into question the methods currently used for the purpose of measuring actual risk preferences. We conclude that while the external validity of measures of risk attitude holds in closely related frameworks, this validity is compromised in more remote settings.

Keywords: Risk preferences; elicitation methods; lab-in-the-field experiment (search for similar items in EconPapers)
JEL-codes: C91 C93 D81 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-hea
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory? (2020)
Working Paper: Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory? (2020)
Working Paper: Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory? (2019)
Working Paper: Do Measures of Risk Attitude in the Laboratory Predict Behavior under Risk in and outside of the Laboratory? (2019)
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