Higher order risk attitudes and prevention under different timings of loss

A-Tier
Journal: Experimental Economics
Year: 2019
Volume: 22
Issue: 1
Pages: 197-215

Authors (2)

Takehito Masuda (Osaka University) Eungik Lee (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Abstract This paper provides experimental evidence of the role of higher order risk attitudes—especially prudence—in prevention behavior. Prudence, under an expected utility framework, increases (decreases) self-protection effort compared to the risk neutral level when the risk of losing part of an income exists in a future (the same) period. Motivated by these predictions that give the exact test on prudence, an experiment was designed where subjects go through higher order risk attitude elicitation and make a self-protection decision. In contrast to the expected utility theory, the observed efforts are less than the risk neutral level, regardless of the timing of loss. This violation of expected utility predictions can be explained by probability weighting.

Technical Details

RePEc Handle
repec:kap:expeco:v:22:y:2019:i:1:d:10.1007_s10683-018-9588-x
Journal Field
Experimental
Author Count
2
Added to Database
2026-01-25