Risk attitudes, randomization to treatment, and self-selection into experiments

    Authors

    G. W. Harrison; M. I. Lau;E. E. Rutstrom

    Comments

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    Abbreviated Journal Title

    J. Econ. Behav. Organ.

    Keywords

    Risk aversion; Randomization; Sample selection; Experiments; SAMPLE SELECTION; FIELD EXPERIMENTS; TIME-PREFERENCES; ELICITING RISK; MODELS; DENMARK; ENTRY; BIAS; Economics

    Abstract

    Randomization to treatment is fundamental to statistical control in the design of experiments. However randomization implies some uncertainty about treatment condition. and individuals differ in their preferences towards taking on risk. Since human subjects often volunteer for experiments or are allowed to drop out of the experiment at any time if they want to, it is possible that the sample observed in an experiment might be biased because of the risk of randomization. On the other hand, the widespread use of a guaranteed show-up fee that is non-stochastic may generate sample selection biases of the opposite direction, encouraging more risk averse samples into experiments. We directly test these hypotheses that risk attitudes play a role in sample selection. Our results suggest that randomization bias does affect the overall level of risk aversion in the sample we observe. but that it does not affect the demographic mix of risk attitudes in the sample. We show that the common use of non-stochastic show-up fees can generate samples that are more risk averse than would otherwise have been observed. (C) 2009 Published by Elsevier B.V.

    Journal Title

    Journal of Economic Behavior & Organization

    Volume

    70

    Issue/Number

    3

    Publication Date

    1-1-2009

    Document Type

    Article

    Language

    English

    First Page

    498

    Last Page

    507

    WOS Identifier

    WOS:000267175900007

    ISSN

    0167-2681

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