Risky choice in the limelight

van den Assem, Martijn J. and Baltussen, Guido and van Dolder, Dennie (2015) Risky choice in the limelight. Review of Economics and Statistics . ISSN 1530-9142 (In Press)

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Abstract

This paper examines how risk behavior in the limelight differs from that in anonymity. In two separate experiments we find that subjects are more risk averse in the limelight. However, risky choices are similarly path dependent in the different treatments. Under both limelight and anonymous laboratory conditions, a simple prospect theory model with a path-dependent reference point provides a better explanation for subjects’ behavior than a flexible specification of expected utility theory. Additionally, our findings suggest that ambiguity aversion depends on being in the limelight, that passive experience has little effect on risk taking, and that reference points are determined by imperfectly updated expectations.

Item Type: Article
Additional Information: This is the manuscript version of the article accepted for publication in Review of Economics and Statistics
Keywords: decision making under risk, risky choice, risk preferences, risk aversion, ambiguity aversion, limelight, accountability, public scrutiny, experience, game show, natural experiment, laboratory experiment, expected utility theory, prospect theory
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1162/REST_a_00505
Related URLs:
URLURL Type
http://www.mitpressjournals.org/loi/restUNSPECIFIED
Depositing User: Van Dolder, Dennie
Date Deposited: 17 Nov 2015 13:18
Last Modified: 18 Sep 2016 10:48
URI: http://eprints.nottingham.ac.uk/id/eprint/30841

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