LOST IN STATE SPACE: ARE PREFERENCES STABLE?*

Authors

  • Steffen Andersen,

    1. Copenhagen Business School, Denmark; University of Central Florida, U.S.A.; Durham University, U.K.; University of Central Florida, U.S.A.
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  • Glenn W. Harrison,

    1. Copenhagen Business School, Denmark; University of Central Florida, U.S.A.; Durham University, U.K.; University of Central Florida, U.S.A.
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  • Morten I. Lau,

    1. Copenhagen Business School, Denmark; University of Central Florida, U.S.A.; Durham University, U.K.; University of Central Florida, U.S.A.
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  • E. Elisabet Rutström

    1. Copenhagen Business School, Denmark; University of Central Florida, U.S.A.; Durham University, U.K.; University of Central Florida, U.S.A.
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    • 1

      We thank the U.S. National Science Foundation for research support under grants NSF/IIS 9817518 and NSF/HSD 0527675, and the Danish Social Science Research Council for research support under project #24-02-0124. We are grateful to two referees for helpful comments. Please address correspondence to: Glenn W. Harrison, Department of Economics, University of Central Florida, P.O. Box 161400, Orlando, FL 32816-1400. E-mail: gharrison@research.bus.ucf.edu.


  • *

    Manuscript received September 2005; revised April 2007.

Abstract

We use field experiments to examine the temporal stability of risk preferences. Over a 17-month period, we elicited risk preferences from subjects chosen to be representative of the adult Danish population. During this period we revisited many of these subjects and repeated a risk aversion elicitation task. We find some variation in risk attitudes over time, but we do not detect a general tendency for risk attitudes to increase or decrease over a 17-month span. The results also suggest that risk preferences are state contingent with respect to personal finances.

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