How General Are Risk Preferences? Choices Under Uncertainty in Different Domains
Mark Cullen (),
Liran Einav,
Amy Finkelstein and
Iuliana Pascu ()
Additional contact information
Mark Cullen: School of Medicine, Stanford University
Iuliana Pascu: Department of Economics, MIT
No 09-005, Discussion Papers from Stanford Institute for Economic Policy Research
Abstract:
We examine the extent to which an individual's actual insurance and investment choices display a stable ranking in willingness to bear risk, relative to his peers, across different contexts. We do so by examining the same individuals' decisions regarding their 401(k) asset allocations and their choices in five different employer-provided insurance domains, including health and disability insurance. We reject the null that there is no domain-general component of preferences. Among the five insurance domains, the magnitude of the domain-general component of preferences appears substantial; we find that one's choices in other insurance domains are sub-stantially more predictive of one’s choice in a given insurance domain than either one’s detailed demographic characteristics or one's claims experience in that domain. However, we find considerably less predictive power between one's insurance choices and the riskiness of one's 401(k) asset allocations, suggesting that the common element of an individual's preferences may be stronger among domains that are "closer" in context. We also find that the relationship between insurance and investment choices appears considerably larger for employees who may be associated with better "financial sophistication." Overall, we view our findings as consistent with an important domain-general component of risk preferences.
JEL-codes: D14 D81 G11 G22 (search for similar items in EconPapers)
Date: 2010-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)
Downloads: (external link)
http://www-siepr.stanford.edu/repec/sip/09-005.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www-siepr.stanford.edu:80 (No such host is known. )
Related works:
Journal Article: How General Are Risk Preferences? Choices under Uncertainty in Different Domains (2012) 
Working Paper: How general are risk preferences? Choices under uncertainty in different domains (2010) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:09-005
Access Statistics for this paper
More papers in Discussion Papers from Stanford Institute for Economic Policy Research Contact information at EDIRC.
Bibliographic data for series maintained by Anne Shor ( this e-mail address is bad, please contact ).