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The Binary Lottery Procedure does not induce risk neutrality in the Holt-Laury and Eckel-Grossman tasks

Oechssler, Jörg ; Sofianos, Andis

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Abstract

We test whether the binary lottery procedure makes subjects behave as if they are risk neutral in the Holt-Laury and Eckel-Grossman tasks. Depending on the task we find that at most a third of subjects behave as if risk neutral. In fact, when we compare the distribution of choices we find no significant difference to earlier experiments in the same lab that did not use the binary lottery procedure.

Item Type: Working paper
Series Name: Discussion Paper Series / University of Heidelberg, Department of Economics
Volume: 0663
Place of Publication: Heidelberg
Date Deposited: 17 May 2019 13:12
Date: May 2019
Number of Pages: 17
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: risk elicitation, binary lottery procedure, experimental economics
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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