Lost in State Space: Are Preferences Stable?

22 Pages Posted: 25 Jul 2008

See all articles by Steffen Andersen

Steffen Andersen

Copenhagen Business School - Department of Finance; CEPR

Glenn W. Harrison

Georgia State University - J. Mack Robinson College of Business

Morten I. Lau

Durham Business School

E. Elisabet Rutström

University of Central Florida - College of Business Administration

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Abstract

We use field experiments to examine the temporal stability of risk preferences. Over a 17-month period, we elicited risk preferences from subjects chosen to be representative of the adult Danish population. During this period we revisited many of these subjects and repeated a risk aversion elicitation task. We find some variation in risk attitudes over time, but we do not detect a general tendency for risk attitudes to increase or decrease over a 17-month span. The results also suggest that risk preferences are state contingent with respect to personal finances.

Suggested Citation

Andersen, Steffen and Harrison, Glenn William and Lau, Morten Igel and Rutstrom, Elisabet, Lost in State Space: Are Preferences Stable?. International Economic Review, Vol. 49, No. 3, pp. 1091-1112, August 2008, Available at SSRN: https://ssrn.com/abstract=1175606 or http://dx.doi.org/10.1111/j.1468-2354.2008.00507.x

Steffen Andersen

Copenhagen Business School - Department of Finance ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

CEPR ( email )

London
United Kingdom

Glenn William Harrison (Contact Author)

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States
407-489-3088 (Phone)
253-830-7636 (Fax)

HOME PAGE: http://www.cear.gsu.edu/

Morten Igel Lau

Durham Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Elisabet Rutstrom

University of Central Florida - College of Business Administration ( email )

PO Box 161400
Orlando, FL 32816
United States

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