Perceptions of risk : an experimental approach using internet questionnaires

Cowell, Frank ORCID: 0000-0002-3778-2152 and Cruces, Guillermo (2003) Perceptions of risk : an experimental approach using internet questionnaires. Distributional Analysis Research Programme; DARP 70 (DARP 70). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Abstract

Building on previous studies on perceptions of inequality, welfare and risk we investigate the structure of individuals' rankings of uncertain prospects in terms of risk and their relationship to individual preferences. We examine three interlinked propositions that are fundamental to the standard economic approach to risk: (i) that rankings by risk are simply the reverse of ranking by preference over distributions with a given mean; (ii) that risk-rankings respect the principle of mean-preserving spreads; (iii) that risk-rankings are independent of whether the individual is personally involved in the gains/losses associated with the uncertain prospects. To do this we use a set of questionnaires implemented through the Virtual Laboratory, a novel experimental setting for the study of normative issues in experimental economics. The results from the questionnaires provide an evaluation of the similitude between individual perceptions of risk and theoretical axioms. They also help identify the individual characteristics that might affect such perceptions.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://sticerd.lse.ac.uk/
Additional Information:	© 2003 Frank A Cowell and Guillermo Cruces
Divisions:	Economics STICERD Centre for Analysis of Social Exclusion
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C13 - Estimation D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Date Deposited:	27 Apr 2007
Last Modified:	01 Oct 2024 04:03
URI:	http://eprints.lse.ac.uk/id/eprint/2235

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