Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185598 
Year of Publication: 
2018
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2018-079/I
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
Higher order risk preferences are important determinants of economic behaviour. We apply behavioural insights to this topic: we measure higher order risk preferences for pure gains and pure losses by controlling the reference point. We find a reflection effect not only for second order risk preferences, as in Kahneman and Tversky 1979, but also for higher order risk preferences: we find risk aversion, prudence and intemperance for gains, but risk loving preferences, imprudence and temperance for losses. The risk aversion and intemperance for gains and the imprudence for losses is evidence against a preference for combining good with bad or good with good, which previous theoretical and empirical results suggest may underlie higher order risk preferences.
Subjects: 
Risk Apportionment
Higher Order Risk Preferences
Risk Aversion
Prudence
Temperance
Reference Dependence
JEL: 
C91
D81
D91
Document Type: 
Working Paper

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