Measuring Individual Risk Attitudes in the Lab: Task or Ask? An Empirical Comparison

23 Pages Posted: 20 Mar 2014

See all articles by Jan-Erik Lönnqvist

Jan-Erik Lönnqvist

University of Helsinki - Department of Psychology

Markku Verkasalo

University of Helsinki

Gari Walkowitz

Technische Universität München (TUM) - School of Governance - Hochschule für Politik

Philipp C. Wichardt

University of Rostock - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 25, 2014

Abstract

This paper compares two prominent empirical measures of individual risk attitudes - the Holt and Laury (2002) lottery-choice task and the multi-item questionnaire advocated by Dohmen, Falk, Huffman, Schupp, Sunde and Wagner (2011) - with respect to (a) their within-subject stability over time (one year) and (b) their correlation with actual risk-taking behaviour in the lab - here the amount sent in a trust game (Berg, Dickaut, McCabe, 1995). As it turns out, the measures themselves are uncorrelated (both times) and, most importantly, only the questionnaire measure exhibits test-re-test stability (p=.78), while virtually no such stability is found in the lottery-choice task. In addition, only the questionnaire measure shows the expected correlations with a Big Five personality measure and is correlated with actual risk-taking behaviour. The results suggest that the questionnaire is the more adequate measure of individual risk attitudes for the analysis of behaviour in economic (lab) experiments. Moreover, with respect to behaviour in the trust game, we find a high re-test stability of transfers (p=.70). This further supports the conjecture that trusting behaviour indeed has a component which itself is a stable individual characteristic (Glaeser, Laibson, Scheinkman and Soutter, 2000).

Keywords: risk attitudes, trust, personality, lab experiments

JEL Classification: D810, C910, Z100

Suggested Citation

Lönnqvist, Jan-Erik and Verkasalo, Markku and Walkowitz, Gari and Wichardt, Philipp C., Measuring Individual Risk Attitudes in the Lab: Task or Ask? An Empirical Comparison (February 25, 2014). CESifo Working Paper Series No. 4663. Available at SSRN: https://ssrn.com/abstract=2411359

Jan-Erik Lönnqvist

University of Helsinki - Department of Psychology ( email )

Meritullinkatu 1
Helsinki 00014
Finland

Markku Verkasalo

University of Helsinki ( email )

University of Helsinki
Helsinki, FIN-00014
Finland

Gari Walkowitz

Technische Universität München (TUM) - School of Governance - Hochschule für Politik ( email )

Richard-Wagner-Str.1
Munich, 80333
Germany

Philipp C. Wichardt (Contact Author)

University of Rostock - Department of Economics ( email )

Ulmenstr. 69
Rostock, 18057
Germany

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