Measuring Individual Risk Attitudes When Preferences are Imprecise

25 Pages Posted: 23 May 2014

See all articles by Graham Loomes

Graham Loomes

University of East Anglia (UEA)

Ganna Pogrebna

Columbia University

Date Written: May 2014

Abstract

There is widespread interest in measuring risk attitudes and incorporating such measures into broader econometric analyses. We consider three elicitation procedures currently in use. We find considerable variability within – and even more, between – the results they produce. We suggest that this reflects the way that different instruments interact with imprecise underlying preferences. The short‐run implication is that such procedures need to be used with caution and are likely to be highly context‐specific. The longer run implication is that adding ‘white noise’ to deterministic models is inadequate: we need to develop models that allow for imprecision and procedural variation.

Suggested Citation

Loomes, Graham and Pogrebna, Ganna, Measuring Individual Risk Attitudes When Preferences are Imprecise (May 2014). The Economic Journal, Vol. 124, Issue 576, pp. 569-593, 2014. Available at SSRN: https://ssrn.com/abstract=2441396 or http://dx.doi.org/10.1111/ecoj.12143

Graham Loomes (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Ganna Pogrebna

Columbia University ( email )

419 Schermerhorn Hall
New York, NY 10027
United States

HOME PAGE: http://www.gannapogrebna.com

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