Assessing Individual Risk Attitudes Using Field Data From Lottery Games

Connel Fullenkamp, Rafael Tenorio, Robert Battalio
2003 Review of Economics and Statistics  
We use information from the television game show with the highest guaranteed average payoff in the U.S., Hoosier Millionaire, to analyze risk-taking 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
more » ... ith 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. JEL Codes: C93, D81, C15
doi:10.1162/rest.2003.85.1.218 fatcat:qn4fvceepjeltpdtmebs2nujlq