Abstract
In this paper, we propose a simple task for eliciting attitudes toward risky choice, the Sabater-Grande and Georgantzis (SGG) lottery-panel task, which consists in a series of lotteries constructed to compensate riskier options with higher risk-return trade-offs. Using Principal Component Analysis technique, we show that the SGG lotterypanel task is capable of capturing two dimensions of individual risky decision making: subjects’ average willingness to choose risky projects and their sensitivity towards variations in the return to risk. We report results from a large dataset obtained from the implementation of the SGG lottery-panel task and discuss regularities and the desirability of its bi-dimensionality both for describing behaviour under uncertainty and explaining behaviour in other contexts.
Highlights
Human beings are usually acting in different contexts and environments
Social scientists like psychologists and economists often try to explain behavior heterogeneity through idiosyncratic differences across subjects. Such differences are usually captured by exposing individuals to decision making tasks or attitude questionnaires
We propose a decision making task which is specific to individual decision making in contexts involving uncertainty of the monetary consequences of one’s actions
Summary
Human beings are usually acting in different contexts and environments. Each individual expresses needs, preferences, attitudes, and ideologies through different actions in each of the domains in which he or she chooses or happens to be. In an ideal world in which a subjects’ personality is a compact and stable system of values and idiosyncratic features, behavior in related contexts should confirm the revelation of the same person Based on this idea, social scientists like psychologists and economists often try to explain behavior heterogeneity through idiosyncratic differences across subjects. Social scientists like psychologists and economists often try to explain behavior heterogeneity through idiosyncratic differences across subjects Such differences are usually captured by exposing individuals to decision making tasks or attitude questionnaires. Beyond the question of what explains what, a systematic rejection of such associations would confine experimental results to the specific setting in which they were obtained, undermining the practical relevance of the research outside the lab This process is parallel and significantly synergic to the very important endeavor of producing correct theories on the measured aspect itself. In a longer working paper, we provide more information on the design of the test, as well as instructions for subjects and the experimenter (García-Gallego et al 2010)
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