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The development of risk aversion and prudence in Chinese children and adolescents

Timo Heinrich and Jason Shachat ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study experimentally evaluates the risk preferences of children and adolescents living in an urban Chinese environment. We use a simple binary choice task that tests risk aversion as well as prudence. This is the first test for prudence in children and adolescents. Our results reveal that subjects from grades 5 to 11 (10 to 17 years) make mostly risk averse and prudent choices. With respect to risk aversion behavior of 3rd graders (8 to 9 years) does not differ statistically from risk neutrality. We also find 3rd graders to make mostly prudent choices. We also find evidence for a transmission of preferences: risk aversion is significantly correlated between children and their parents. Also, prudence is significantly correlated between girls (but not boys) and their parents.

Keywords: risk aversion; prudence; transmission of preferences; age effects; experimental economics; children (search for similar items in EconPapers)
JEL-codes: C93 D81 J13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-tra, nep-upt and nep-ure
Date: 2018-04-30
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