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Journal Article

No. 2012-38 | October 22, 2012
Estimating Risk Attitudes in Conventional and Artefactual Lab Experiments: The Importance of the Underlying Assumptions PDF Icon


In this paper we assess the importance of sample type in the estimation of risk preferences. We elicit and compare risk preferences from student subjects and subjects drawn from the general population, using the multiple price list method devised by Holt and Laury in their paper Risk Aversion and Incentive Effects (2002). We find evidence suggesting that under rank dependent utility, students exhibit approximately risk neutral preferences while subjects drawn from the general population exhibit risk loving preferences. However, when we assume an incorrect characterization of risk preferences, in particular we adopt the framework of expected utility theory, our estimation results lead to erroneous inferences. In this case, students are on average risk averse, while subjects drawn from the general population exhibit risk neutrality. Our results have implications for economic policy making under uncertainty.

Data Set

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The data set for this article can be found at: http://hdl.handle.net/1902.1/17911

JEL Classification

C91 D01 D81


Andreas C. Drichoutis and Phoebe Koundouri (2012). Estimating Risk Attitudes in Conventional and Artefactual Lab Experiments: The Importance of the Underlying Assumptions. Economics: The Open-Access, Open-Assessment E-Journal, 6 (2012-38): 1—15. http://dx.doi.org/10.5018/economics-ejournal.ja.2012-38


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Comments and Questions

Anonymous - Students Definition
October 26, 2012 - 16:58

The paper is an excellent discussion of the problem of risk and attitudes about risk. It clearly provide a very interesting simulation of students' and general populations' problem in making economic investment choices. However, there is some rather confusing conceptualization of students as "incomplete personalities" that I find difficult to ...[more]

... understand. The author may need to correct the impression that students are some homogenous group that has no link with the general population.

Besides this the paper is very good.

Anonymous - Students Definition
October 31, 2012 - 09:50

The conceptualization of students as incomplete personalities does not necessarily reflect our view, it is, however, implied by the relevant literature. For example, Sears (1986) reports that young adults have more unstable attitudes than older people.

In the discussion of the differences between student samples and samples from ...[more]

... the general population we would direct the reader to take a look at Harrison and List’s (2004) discussion in pp. 1017-1020.


Harrison, G.W. and List, J.A. (2004). Field Experiments. Journal of Economic Literature, 42(4): 1009-55.

Sears, D.O. (1986). College Sophomores in the Laboratory: Influences of a Narrow Data Base on Social Psychology’s View of Human Nature. Journal of Personality and Social Psychology 51(3): 515-530.