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  Risk Taking in the Household: Strategic Behavior, Social Preferences, or Interdependent Preferences?

Engel, C., Fedorets, A., & Gorelkina, O. (2018). Risk Taking in the Household: Strategic Behavior, Social Preferences, or Interdependent Preferences?

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Item Permalink: http://hdl.handle.net/21.11116/0000-0002-8B3F-C Version Permalink: http://hdl.handle.net/21.11116/0000-0005-A856-D
Genre: Paper

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 Creators:
Engel, Christoph1, Author              
Fedorets, Alexandra, Author
Gorelkina, Olga1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: interdependent risk preference, household, reticence to expose others to risk, trade-off between own and others’ risk preferences
 JEL: C45 - Neural Networks and Related Topics
 JEL: D13 - Household Production and Intrahousehold Allocation
 JEL: D81 - Criteria for Decision-Making under Risk and Uncertainty
 JEL: D91 - Intertemporal Household Choice; Life Cycle Models and Saving
 Abstract: We test 494 households participating in the German Socio Economic Panel SOEP to examine risk taking by one household member that affects a second household member. Choices cannot be explained by (short term) strategic behavior. Respect for the risk preference of the counterpart is at best imperfect. Two findings suggest preference dependence: participants do not need explicit information about their counterpart’s choice to learn their risk preference. There are characteristic choice patterns not only at the individual, but also at the household level. To define these patterns, based on a theoretical model, we calculate individual risk aversion, sensitivity toward a bad outcome for the other household member, and the willingness to strike a balance between one’s own and the other’s risk preferences. Using machine learning methods, we find preference patterns, both at the individual and at the household level.

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 Dates: 2020-02-142018
 Publication Status: Published online
 Pages: -
 Publishing info: Bonn : Max-Planck-Institut zur Erforschung von Gemeinschaftsgütern, Discussion Paper 2018/14
 Table of Contents: -
 Rev. Type: -
 Identifiers: Other: 2018/14
 Degree: -

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