The “bomb” risk elicitation task

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 6710 July 2012 ABSTRACTThe "Bomb" Risk Elicitation Task * This paper presents the Bomb Risk Elicitation Task (BRET), an intuitive procedure aimed at measuring risk attitudes. Subjects decide how many boxes to collect out of 100, one of which containing a bomb. Earnings increase linearly with the number of boxes accumulated but are zero if the bomb is also collected. The BRET requires minimal numeracy skills, avoids truncation of the data, allows to precisely estimate both risk aversion and risk seeking, and is not affected by the degree of loss aversion or by violations of the Reduction Axiom. We validate the task and test its robustness in a large-scale experiment. Choices react significantly to the stakes and to the size of the choice set. Our experiment rationalizes the gender gap that often characterizes choices under uncertainty by means of a higher loss rather than risk aversion.JEL Classification: C81, C91, D81

Temporal Stability, Cross-Validity, and External Validity of Risk Preferences Measures: Experimental Evidence from a UK Representative Sample

“…Loomes and Pogrebna (2014) compare responses to the AT, B-EG, and HL tasks and find no correlation between any of them. Further evidence of imperfectly mapping responses across different methods to measure risk preferences in student samples has also been provided by Isaac and James (2000), Anderson and Mellor (2009), Reynaud and Couture (2012), Dulleck et al (2013), Vieider et al (2015b), and Attanasi et al (2016) using a within-subject design, and by Crosetto and Filippin (2013) using a between-subject design. Dave et al (2010) consider a general population sample in Canada, and compare responses across the B-EG and HL methods using experimental tasks that are similar to the ones we use: they find significantly higher risk aversion in the HL than in the B-EG task.…”

“…In experimental and behavioral economics, besides the already mentioned B-EG and HL methods, several other incentive-compatible methods have been proposed to measure risk preferences (see Cox and Harrison, 2008;Harrison and Rutström, 2008;Charness et al, 2013 for some recent reviews of the literature). Some examples are the Becker-DeGroot-Marschack mechanism, the First Price Auction and the Second Price Auction methods (Becker et al, 1964;Cox et al, 1988;Harrison, 1986Harrison, , 1990Isaac and James, 2000); the Allocation Task (AT) (Loomes, 1991); the Trade-Off Methods (Wakker and Deneffe, 1996;Barsky et al, 1997;Anderson and Mellor, 2009); the Charness-Gneezy-Potters investment game (Gneezy and Potters, 1997;Charness and Gneezy, 2010); the Lottery Panel test (Sabater-Grande and Georgantzis, 2002;Georgantzís and Navarro-Martínez, 2010); and, more recently, the Bomb Risk Elicitation Task (Crosetto and Filippin, 2013). Besides the HL method, other multiple price list (MPL) methods have been used, among others, by Harless and Camerer (1994); Hey and Orme (1994); Loomes and Sugden (1998); Donkers et al (2001); Harbaugh et al (2002Harbaugh et al ( , 2010; Harrison et al (2005cHarrison et al ( , 2007a; Jacobson and Petrie (2009);Tanaka et al (2010); Dohmen et al (2011);Von Gaudecker et al (2011);Sutter et al (2013);Vieider et al (2015a).…”

Elicitation of preferences under ambiguity

“…These include Holt-Laury Price Lists (Holt and Laury 2002), Pairwise Choice questions (Hey and Orme 1994), the Becker-DeGroot-Marschak (BDM) Mechanism (Becker et al 1964), the Bomb Risk Elicitation Task (Crosetto and Filippin 2013), and the Allocation Method, pioneered originally by Loomes (1991), revived by Andreoni and Miller (2002) in a social choice context, and later by Choi et al (2007) in a risky choice context. Some of these are contrasted and compared in Loomes and Pogrebna (2014) and in Zhou and Hey (unpublished).…”

Click‘n’Roll: No Evidence of Illusion of Control

“…Our treatments are all built on the Bomb Risk Elicitation Task (BRET), a visual real time risk elicitation task introduced by Crosetto and Filippin (2013). Subjects face a 10 × 10 square in which each numbered cell represents a box.…”

“…We do so setting up a design that clearly identifies and separately manipulates in an incentivized setting the illusion of control over the choice (or definition) of the lottery vs. the illusion of control over the resolution of uncertainty. 3 Towards this goal we exploit some useful features of the Bomb Risk Elicitation Task (BRET) (Crosetto and Filippin, 2013). On the one hand, the BRET allows us to measure whether illusion of control makes subjects more risk seeking, similarly to the design of Charness and Gneezy (2010).…”