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Assessing Individual Risk Attitudes Using Field Data From Lottery Games

Connel Fullenkamp¹; Rafael Tenorio²; Robert H. Battalio³

¹ Duke University · ² DePaul University · ³ University of Notre Dame

We use information from the television game show with the highest guaranteed average payoff in the United States, Hoosier Millionaire, to analyze risktaking in a high-stakes experiment. We characterize gambling decisions under alternative assumptions about contestant behavior and preferences, and derive testable restrictions on individual risk attitudes based on this characterization. We then use an extensive sample of gambling decisions to estimate distributions of risk-aversion parameters consistent with the theoretical restrictions and revealed preferences. We find that although most contestants display risk-averse preferences, the extent of the risk aversion implied by our estimates varies substantially with the stakes involved in the different decisions.

DOI

10.1162/rest.2003.85.1.218

Volume

85 (1)

Pages

218-226

Language

en

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