Investing Versus Gambling: Experimental Evidence Of Multi-Domain Risk Attitudes
Economists have noted the empirical regularity that an individual’s attitude towards risk is not constant across elicitation settings. Such a pattern is conceptually consistent with the argument in psychology that risk is domain specific. To explore this view, we frame a common risk elicitation tool in laboratory experiments as both a gambling game and an investment opportunity. A survey instrument used to measure one’s attitudes towards risks on different domains is found to explain partially within-subject variation in observed behaviour between the two tasks. The evidence presented in this article demonstrates the need to consider more nuanced approaches to modelling risk.
Deck, C., Lee, J., and Reyes, J. (2014). “Investing versus Gambling: Experimental Evidence of Multi-Domain Risk Attitudes,” Applied Economics Letters, 21(1), pp. 19-23.
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