Eliciting Risk Preferences Using Choice Lists
Quantitative economics（2019）
Abstract
We study the effect of embedding pairwise choices between lotteries within a choice list on measured risk attitude. Using an experiment with online workers, we find that subjects choose the risky lottery rather than a sure payment significantly more often when responding to a choice list. This behavior can be rationalized by the interaction between nonexpected utility and the random incentive system, as suggested by Karni and Safra (1987).
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Key words
Random incentive system,isolation,independence axiom,multiple price list,reduction of compound lotteries,preference reversals,certainty effect
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