Journal
JOURNAL OF ECONOMIC PSYCHOLOGY
Volume 28, Issue 3, Pages 338-350Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.joep.2007.01.006
Keywords
individual risk attitude; binary lottery choices; experimental asset markets; gender differences
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In this paper we relate individual risk attitude as elicited by binary lottery choices to market behavior. By analyzing 26 independent experimental markets with a total of 280 participants, we show that binary lottery choices are systematically correlated with market behavior: the higher the degree of risk aversion the lower the observed market activity. Our results also uncover gender differences in risk attitude, which moderate market behavior. We find that women are more risk averse than men, submit fewer offers, and engage less often in trades. (c) 2007 Elsevier B.V. All rights reserved.
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