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Is There a Life After Holt and Laury (2002)? Ganna Pogrebna March 11, 2010 GvPGvP.

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Presentation on theme: "Is There a Life After Holt and Laury (2002)? Ganna Pogrebna March 11, 2010 GvPGvP."— Presentation transcript:

1 Is There a Life After Holt and Laury (2002)? Ganna Pogrebna March 11, 2010 GvPGvP

2 Holt and Laury (2002) Procedure Relatively “Safe” OptionRelatively “Risky” Option 1/10 of 2.00 LCU, 9/10 of 1.60 LCU1/10 of 3.85 LCU, 9/10 of 0.10 LCU 2/10 of 2.00 LCU, 8/10 of 1.60 LCU2/10 of 3.85 LCU, 8/10 of 0.10 LCU 3/10 of 2.00 LCU, 7/10 of 1.60 LCU3/10 of 3.85 LCU, 7/10 of 0.10 LCU 4/10 of 2.00 LCU, 6/10 of 1.60 LCU4/10 of 3.85 LCU, 6/10 of 0.10 LCU 5/10 of 2.00 LCU, 5/10 of 1.60 LCU5/10 of 3.85 LCU, 5/10 of 0.10 LCU 6/10 of 2.00 LCU, 4/10 of 1.60 LCU6/10 of 3.85 LCU, 4/10 of 0.10 LCU 7/10 of 2.00 LCU, 3/10 of 1.60 LCU7/10 of 3.85 LCU, 3/10 of 0.10 LCU 8/10 of 2.00 LCU, 2/10 of 1.60 LCU8/10 of 3.85 LCU, 2/10 of 0.10 LCU 9/10 of 2.00 LCU, 1/10 of 1.60 LCU9/10 of 3.85 LCU, 1/10 of 0.10 LCU 10/10 of 2.00 LCU, 0/10 of 1.60 LCU10/10 of 3.85 LCU, 0/10 of 0.10 LCU GvPGvP

3 Popularity of Holt and Laury (2002)  Google Scholar:  Holt and Laury (2002): 6,350 citations  Eckel and Grossman (2002): 411 citations  DoSpeRT Scale by Weber et al. (2002): 54 citations  JSTOR:  Holt and Laury (2002): 65 citations  Eckel and Grossman (2002): 29 citations  DoSpeRT Scale by Weber et al. (2002): 6 citations GvPGvP

4 Virtues and Vices  Virtues:  please the referees  cheap and easy to implement  “relative” flavor  Vices:  not much heterogeneity in the data (majority of participants “slightly risk averse”/ “risk averse”)  inconsistent participants cannot be classified  may produce results that are not robust  assumes CRRA utility function GvPGvP

5 One Empirical Observation RankDescription 0-1highly risk seeking 2very risk seeking 3risk seeking 4risk neutral 5slightly risk averse 6risk averse 7very risk averse 8highly risk averse 9-10extremely risk averse Holt and Laury Measure (HL) Self-Reported Measure (SR) RankDescription 1very risk loving 2risk loving 3slightly risk loving 4neutral 5slightly risk averse 6risk averse 7very risk averse GvPGvP

6 One Empirical Observation (continued)  Innsbruck, Austria ( ) 161 participants SR Risk seeking Risk neutral Risk averse HL Risk seeking Risk neutral Risk averse p=0.000 p=0.041 GvPGvP

7 Controlling for Gender  Innsbruck, Austria ( ) 161 participants SR Risk seekingRisk neutralRisk averse HL Risk seeking 6129 Risk neutral Risk averse SR Risk seekingRisk neutralRisk averse HL Risk seeking 0101 Risk neutral Risk averse MEN WOMEN

8 One Empirical Observation (continued)  Berlin, Germany (2008) 184 participants SR Risk seeking Risk neutral Risk averse HL Risk seeking Risk neutral Risk averse p=0.000 p=0.470 GvPGvP

9 Controlling for Gender  Berlin, Germany (2008) 184 participants SR Risk seekingRisk neutralRisk averse HL Risk seeking Risk neutral Risk averse SR Risk seekingRisk neutralRisk averse HL Risk seeking 5106 Risk neutral Risk averse MEN WOMEN

10 One Empirical Observation (continued)  New York, USA ( ) 562 participants SR Risk seeking Risk neutral Risk averse HL Risk seeking Risk neutral Risk averse p=0.000 GvPGvP

11 Controlling for Gender  New York, USA ( ) 562 participants SR Risk seekingRisk neutralRisk averse HL Risk seeking Risk neutral Risk averse SR Risk seekingRisk neutralRisk averse HL Risk seeking Risk neutral Risk averse MEN WOMEN

12 Possible Explanations and Questions  Incentives  “Risk” overconfidence  People do not have CRRA utility function Which measure has an impact on behavior: HL or SR? GvPGvP Which measure provides a “correct” representation of individual risk attitude?


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