Estimating Risk Attitudes in Denmark: A Field Experiment

UCF Economics Working Paper No. 04-07

41 Pages Posted: 20 Apr 2005

See all articles by Glenn W. Harrison

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

Multiple version iconThere are 2 versions of this paper

Date Written: February 2005

Abstract

We estimate individual risk attitudes using controlled experiments in the field in Denmark. These risk preferences are elicited by means of field experiments involving real monetary rewards. The experiments were carried out across Denmark using a representative sample of 253 people between 19 and 75 years of age. Risk attitudes are estimated for various individuals differentiated by socio-demographic characteristics such as income and age. Our results indicate that the average Dane is risk averse, and that risk neutrality is an inappropriate assumption to apply. We also find that risk attitudes vary significantly with respect to several important socio-demographic variables. We also report support for constancy of relative risk aversion for the Danish population as a whole, and for all the identifiable subgroups of the population considered here. These findings have important implications for the characterization of risk attitudes in policy applications, theoretical modeling, and experimental economics.

Keywords: Risk aversion, experimental economics, field experiments

JEL Classification: D81, C93

Suggested Citation

Harrison, Glenn William and Lau, Morten Igel and Rutstrom, Elisabet, Estimating Risk Attitudes in Denmark: A Field Experiment (February 2005). UCF Economics Working Paper No. 04-07, Available at SSRN: https://ssrn.com/abstract=698444 or http://dx.doi.org/10.2139/ssrn.698444

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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