Exploring the consistency of higher-order risk preferences

Haering, A.; Heinrich, T.; Mayrhofer, T.

doi:10.1111/iere.12424

Exploring the consistency of higher-order risk preferences

Haering, A.; Heinrich, T.; Mayrhofer, T.

Authors

A. Haering

T. Heinrich

T. Mayrhofer

Abstract

This study measures higher‐order risk preferences and their consistency. We explore the role of country differences, the variation of stakes, and the framing of lotteries. We observe a robust dichotomous pattern of choice behavior in China, in the USA and in Germany. The majority of choices are consistent with mixed risk aversion or mixed risk‐loving behavior. We also find this pattern after a tenfold increase in the stakes. Finally, our results reveal that this pattern is strengthened if the lotteries are displayed in compound rather than reduced form. In a follow‐up study we explore potential explanations for this framing effect.

Citation

Haering, A., Heinrich, T., & Mayrhofer, T. (2020). Exploring the consistency of higher-order risk preferences. International Economic Review, 61(1), 283-320. https://doi.org/10.1111/iere.12424

Journal Article Type	Article
Acceptance Date	Jun 15, 2019
Online Publication Date	Jan 11, 2020
Publication Date	Feb 28, 2020
Deposit Date	Jun 25, 2019
Publicly Available Date	Jan 11, 2022
Journal	International Economic Review
Print ISSN	0020-6598
Electronic ISSN	1468-2354
Publisher	Wiley
Peer Reviewed	Peer Reviewed
Volume	61
Issue	1
Pages	283-320
DOI	https://doi.org/10.1111/iere.12424
Public URL	https://durham-repository.worktribe.com/output/1298845

Files

Accepted Journal Article (3.7 Mb)
PDF

Copyright Statement
This is the accepted version of the following article: Haering, A., Heinrich,T. & Mayrhofer,T. (2020). Exploring the consistency of higher-order risk preferences. International Economic Review 61(1): 283-320, which has been published in final form at https://doi.org/10.1111/iere.12424. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.