Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/313148 
Year of Publication: 
2022
Citation: 
[Journal:] Experimental Economics [ISSN:] 1573-6938 [Volume:] 26 [Issue:] 1 [Publisher:] Springer US [Place:] New York, NY [Year:] 2022 [Pages:] 1-26
Publisher: 
Springer US, New York, NY
Abstract: 
How does risk aversion change in wealth? To answer this question, we implemented a field experiment in the form of a free-to-play mobile game. Players made lottery choices at various points in the game and at different levels of in-game wealth. Since the game was designed as a closed economic system, that is, wealth could not be transferred into or out of the game, only in-game wealth was relevant for players' choices. Analyzing the choices of over 2000 players, we find evidence for decreasing absolute risk aversion and decreasing relative risk aversion. We also find evidence of an "always safe" heuristic in a subgroup of decisions and observe a tendency of players to act according to the "hot hand fallacy". Our research design allows us to exclude inertia and lets us analyze lottery stakes of significant size relative to in-game wealth. Our results render implications for theoretical research, empirical studies, and for the optimal design of financial products.
Subjects: 
Risk preferences
Field experiment
Heuristic behavior
Hot hand fallacy
JEL: 
D01
D81
I12
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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