Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81522
Authors: 
Andersson, Ola
Tyran, Jean-Robert
Wengström, Erik
Holm, Håkan J.
Year of Publication: 
2013
Series/Report no.: 
IFN Working Paper 964
Abstract: 
Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making, rather than to risk preferences.
Subjects: 
Risk preference
Cognitive ability
Experiment
Noise
JEL: 
C81
C91
D12
D81
Document Type: 
Working Paper

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