Experimental Evidence on Socioeconomic Differences in Risk‐Taking and Risk Premiums

Abstract

Using a route choice experiment with embedded travel time variability, this study empirically estimates car commuters' risk attitudes and taste preferences within a nonlinear mixed logit model. In addition to the identified overall risk-taking behaviour, we find that risk attitudes covary with some sociodemographic characteristics, that is, older commuters are more risk-taking than young ones and higher-income commuters are less risk-taking than lowincome ones. The implications of accounting for systematic risk attitude heterogeneity for valuing travellers' willingness to pay for travel time improvement are also discussed.

On the Relationship between Cognitive Ability and Risk Preference

“…A second pattern that emerges from the literature reveals differences in the correlation between risk taking in lotteries and cognitive ability depending on whether lotteries only entail gains or also potential losses. 2 In particular, and similar 2 An example of a lottery with outcomes in the gain domain is: you win 100 with 50 percent chance or you win 900 with 50 percent chance. An example of a lottery in the loss domain is: you lose 100 with 50 percent chance or you lose 900 with 50 percent chance.…”