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Risk aversion relates to cognitive ability: Preferences or Noise?

Andersson, Ola LU ; Holm, Jerker LU ; Tyran, Jean-Robert and Wengström, Erik LU (2016) In Journal of the European Economic Association 14(5). p.1129-1154
Abstract
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)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
in
Journal of the European Economic Association
volume
14
issue
5
pages
26 pages
publisher
Wiley-Blackwell
external identifiers
  • scopus:84980390267
  • wos:000389064000005
ISSN
1542-4774
DOI
10.1111/jeea.12179
language
English
LU publication?
yes
id
be0bd362-55af-4cda-b89a-1c98af2a4bc8 (old id 8046677)
date added to LUP
2015-10-05 10:17:26
date last changed
2017-09-18 11:28:48
@article{be0bd362-55af-4cda-b89a-1c98af2a4bc8,
  abstract     = {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)},
  author       = {Andersson, Ola and Holm, Jerker and Tyran, Jean-Robert and Wengström, Erik},
  issn         = {1542-4774},
  language     = {eng},
  number       = {5},
  pages        = {1129--1154},
  publisher    = {Wiley-Blackwell},
  series       = {Journal of the European Economic Association},
  title        = {Risk aversion relates to cognitive ability: Preferences or Noise?},
  url          = {http://dx.doi.org/10.1111/jeea.12179},
  volume       = {14},
  year         = {2016},
}