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Risk and punishment revisited Errors in variables and in the lab

Christoph Engel () and Oliver Kirchkamp

No 2016-015, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We provide an example for an errors in variables problem which might be often neglected but which is quite common in lab experimental practice: In one task, attitude towards risk is measured, in another task participants behave in a way that can possibly be explained by their risk attitude. How should we deal with inconsistent behaviour in the risk task? Ignoring these observations entails two biases: An errors in variables bias and a selection bias. We argue that inconsistent observations should be exploited to address the errors in variables problem, which can easily be done within a Bayesian framework.

Keywords: Risk; lab experiment; public good; errors in variables; Bayesian inference (search for similar items in EconPapers)
JEL-codes: C91 D43 L41 (search for similar items in EconPapers)
Date: 2016-07-26
New Economics Papers: this item is included in nep-cbe and nep-exp
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