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  Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior

Schneider, S., & Sutter, M. (2020). Higher Order Risk Preferences: New Experimental Measures, Determinants and Field Behavior.

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Item Permalink: http://hdl.handle.net/21.11116/0000-0006-ED24-7 Version Permalink: http://hdl.handle.net/21.11116/0000-0006-ED25-6
Genre: Paper

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 Creators:
Schneider, Sebastian1, Author              
Sutter, Matthias1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Higher order risk preferences, prudence, temperance, risk aversion, field behavior, adolescents, health, addictive behavior, smartphone addiction, experiment
 JEL: C93 - Field Experiments
 JEL: D81 - Criteria for Decision-Making under Risk and Uncertainty
 JEL: D91 - Intertemporal Household Choice; Life Cycle Models and Saving
 JEL: J13 - Fertility; Family Planning; Child Care; Children; Youth
 Abstract: We use a novel method to elicit and measure higher order risk preferences (prudence and temperance) in an experiment with 658 adolescents. In line with theoretical predictions, we find that higher order risk preferences – particularly prudence – are strongly related to adolescents' field behavior, including their financial decision making, eco-friendly behavior, and health status, including addictive behavior. Most importantly, we show that dropping prudence and temperance from the analysis of students' field behavior would yield largely misleading conclusions about the relation of risk aversion to these domains of field behavior. Thus our paper puts previous work that ignored higher order risk preferences into an encompassing perspective and clarifies which orders of risk preferences can help understand field behavior of adolescents.

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 Dates: 2020-08-31
 Publication Status: Published online
 Pages: -
 Publishing info: Bonn : Max Planck Institute for Research on Collective Goods, Discussion Paper 2020/22
 Table of Contents: -
 Rev. Type: -
 Identifiers: Other: 2020/22
 Degree: -

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