Botti, F., Conte, A., Di Cagno, D.T. and D’Ippoliti, C. 2008. Risk attitude in real decision problems. *The B.E. Journal of Economic Analysis & Policy.* 8 (1).

Title | Risk attitude in real decision problems |
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Authors | Botti, F., Conte, A., Di Cagno, D.T. and D’Ippoliti, C. |

Abstract | We use data from 298 showings of the television program "Affari Tuoi," which involves contestants making decisions between risky prospects with possible prizes of up to half a million euros, to estimate three models of decision-making under risk: Expected Utility, Rank-Dependent Expected Utility and Regret-Rejoice. We find that Regret-Rejoice does not significantly improve upon Expected Utility, while Rank-Dependent outperforms it. Interestingly, we find that the CARA specification fits significantly better than the conventionally-adopted CRRA specification. Crucially, we find a significant role for unobserved heterogeneity, implying that our estimates provide more superior estimates of risk attitude and of probability weighting than other studies. |

Journal | The B.E. Journal of Economic Analysis & Policy |

Journal citation | 8 (1) |

ISSN | 1935-1682 |

Year | Mar 2008 |

Publisher | De Gruyter |

Digital Object Identifier (DOI) | doi:10.2202/1935-1682.1798 |

Publication dates | |

Published | Mar 2008 |