How general are risk preferences? Choices under uncertainty in different domains
Name
Finkelstein_How general.pdf
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277.49 KB
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Author(s)
Einav, Liran
Finkelstein, Amy
Pascu, Iuliana
Cullen, Mark R.
Date Issued
October 2012
Journal
American Economic Review
Publisher
American Economic Association
Citation
Einav, Liran et al. “How General Are Risk Preferences? Choices Under Uncertainty in Different Domains.” American Economic Review 102.6 (2012): 2606–2638. Web.
Version
Author's final manuscript
Abstract
We analyze the extent to which individuals' choices over five employer-provided insurance coverage decisions and one 401(k) investment decision exhibit systematic patterns, as would be implied by a general utility component of risk preferences. We provide evidence consistent with an important domain-general component that operates across all insurance choices. We find a considerably weaker relationship between one's insurance decisions and 401(k) asset allocation, although this relationship appears larger for more "financially sophisticated" individuals. Estimates from a stylized coverage choice model suggest that up to 30 percent of our sample makes choices that may be consistent across all 6 domains.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1257/aer.102.6.2606
