The lottery-panel task for bi-dimensional parameter-free elicitation of risk attitudes
DOI:
https://doi.org/10.3989/ris.2011.07.1AKeywords:
Decision-making, Lotteries, Psychometric tests, Risk aversionAbstract
In this paper, we propose a simple task for eliciting attitudes toward risky choice, the Sabater-Grande and Georgantzís (SGG) lottery-panel task, which consists in a series of lotteries constructed to compensate riskier options with higher risk-return trade-offs. Using Principal Component Analysis technique, we show that the SGG lotterypanel task is capable of capturing two dimensions of individual risky decision making: subjects’ average willingness to choose risky projects and their sensitivity towards variations in the return to risk. We report results from a large dataset obtained from the implementation of the SGG lottery-panel task and discuss regularities and the desirability of its bi-dimensionality both for describing behaviour under uncertainty and explaining behaviour in other contexts.
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