Blavatskyy, Pavlo and Pogrebna, Ganna. (2008) Risk aversion when gains are likely and unlikely : evidence from a natural experiment with large stakes. Theory and Decision, Vol.64 (No.2-3). pp. 395-420. ISSN 0040-5833

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Abstract

In the television show Deal or No Deal a contestant is endowed with a sealed box, which potentially contains a large monetary prize. In the course of the show the contestant learns more information about the distribution of possible monetary prizes inside her box. Consider two groups of contestants, who learned that the chances of their boxes containing a large prize are 20% and 80% correspondingly. Contestants in both groups receive qualitatively similar price offers for selling the content of their boxes. If contestants are less risk averse when facing unlikely gains, the price offer is likely to be more frequently rejected in the first group than in the second group. However, the fraction of rejections is virtually identical across two groups. Thus, contestants appear to have identical risk attitudes over (large) gains of low and high probability.

Item Type:	Journal Article
Subjects:	H Social Sciences > HM Sociology Q Science > QA Mathematics
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Theory and Decision
Publisher:	Springer Netherlands
ISSN:	0040-5833
Date:	2008
Volume:	Vol.64
Number:	No.2-3
Number of Pages:	26
Page Range:	pp. 395-420
Identification Number:	10.1007/s11238-007-9056-0
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/45591

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