Risk aversion relates to cognitive ability: Fact or Fiction
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Risk aversion relates to cognitive ability : Fact or Fiction. / Andersson, Ola ; Holm, Håkan J. ; Tyran, Jean-Robert Karl; Wengström, Erik Roland.
Kbh. : Økonomisk institut, Københavns Universitet, 2013.Research output: Working paper › Research
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TY - UNPB
T1 - Risk aversion relates to cognitive ability
T2 - Fact or Fiction
AU - Andersson, Ola
AU - Holm, Håkan J.
AU - Tyran, Jean-Robert Karl
AU - Wengström, Erik Roland
N1 - JEL codes: C81; C91; D12; D81
PY - 2013
Y1 - 2013
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.
KW - Faculty of Social Sciences
KW - Risk preference
KW - cognitive ability
KW - experiment
KW - noise
M3 - Working paper
T3 - University of Copenhagen. Institute of Economics. Discussion Papers
BT - Risk aversion relates to cognitive ability
PB - Økonomisk institut, Københavns Universitet
CY - Kbh.
ER -
ID: 85237386