Assessing individual risk attitudes using field data from lottery games
Abstract
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.
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https://hdl.handle.net/10161/2003Collections
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Connel Fullenkamp
Professor of the Practice of Economics
Professor Fullenkamp specializes in the investigation of financial market development
and regulation of financial markets. His projects often involve the exploration of
such variables as immigrant worker remittances, economic policy, and the development
of countries. His completed papers have appeared in various leading academic journals,
including The Cato Journal, the Journal of Banking and Finance, the Review of Economic
Dynamics, and the Review of Economics and Statistics. Titles of his p

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