Risk Aversion Relates to Cognitive Ability: Preferences or Noise?
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Risk Aversion Relates to Cognitive Ability : Preferences or Noise? / Andersson, Ola; Holm, Håkan J.; Tyran, Jean-Robert Karl; Wengström, Erik.
I: Journal of the European Economic Association, Bind 14, Nr. 5, 2016, s. 1129-1154.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Risk Aversion Relates to Cognitive Ability
T2 - Preferences or Noise?
AU - Andersson, Ola
AU - Holm, Håkan J.
AU - Tyran, Jean-Robert Karl
AU - Wengström, Erik
N1 - JEL: C81, C91, D12, D81
PY - 2016
Y1 - 2016
N2 - Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might 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. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making, rather than to risk preferences.
AB - Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might 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. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making, rather than to risk preferences.
U2 - 10.1111/jeea.12179
DO - 10.1111/jeea.12179
M3 - Journal article
VL - 14
SP - 1129
EP - 1154
JO - Journal of the European Economic Association
JF - Journal of the European Economic Association
SN - 1542-4774
IS - 5
ER -
ID: 144891347