Titre
Risk and Rationality: Uncovering Heterogeneity in Probability Distortion
Type
article
Institution
Externe
Périodique
Auteur(s)
Bruhin, A.
Auteure/Auteur
Fehr-Duda, H.
Auteure/Auteur
Epper, T.
Auteure/Auteur
Liens vers les personnes
ISSN
0012-9682
Statut éditorial
Publié
Date de publication
2010-07
Volume
78
Numéro
4
Première page
1375
Dernière page/numéro d’article
1412
Peer-reviewed
Oui
Langue
anglais
Résumé
It has long been recognized that there is considerable heterogeneity in individual risk taking behavior, but little is known about the distribution of risk taking types. We present a parsimonious characterization of risk taking behavior by estimating a finite mixture model for three different experimental data sets, two Swiss and one Chinese, over a large number of real gains and losses. We find two major types of individuals: In all three data sets, the choices of roughly 80% of the subjects exhibit significant deviations from linear probability weighting of varying strength, consistent with prospect theory. Twenty percent of the subjects weight probabilities near linearly and behave essentially as expected value maximizers. Moreover, individuals are cleanly assigned to one type with probabilities close to unity. The reliability and robustness of our classification suggest using a mix of preference theories in applied economic modeling.
PID Serval
serval:BIB_5E0378B1A236
Date de création
2012-09-10T09:03:38.716Z
Date de création dans IRIS
2025-05-20T13:45:54Z