Risk aversion relates to cognitive ability: Preferences or Noise?
Author
Summary, in English
Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation may be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making rather than to risk preferences. (JEL: C81, C91, D12, D81)
Department/s
Publishing year
2016
Language
English
Pages
1129-1154
Publication/Series
Journal of the European Economic Association
Volume
14
Issue
5
Document type
Journal article
Publisher
Wiley-Blackwell
Topic
- Economics
Status
Published
ISBN/ISSN/Other
- ISSN: 1542-4774