ROS, MAP, MARS, Clinical Core
Decision Making and Behavioral Economics, Affect and Personality
The risk aversion coefficient is a measure of the tendency to prefer a sure but less lucrative payout over an unknown but possibly greater one. Risk aversion is assessed with 10 questions used in standard behavioral economics approaches.
Participants are asked if they would prefer $15 for sure OR a coin toss in which they could get $[an amount greater than $15] if they flip heads or nothing if they flipped tails. Possible gains range from $20 to $300 and gain amounts are varied across questions. Questions are developed in such a manner that any gamble that offers a potential gain of $30 results in the same long run average or expected utility, and any gamble that is over $30 results in a greater than expected utility. Therefore, any gamble over $30 is a “preferred” choice.
We estimate the risk aversion coefficient using a well-established behavioral economics approach based on participants’ odds of choosing the gamble over the safe option and the expected utility of the gamble for each question. See reference for further details on the equation used to calculate this coefficient.
Participants are asked the following questions:
Would you prefer $15 for sure, OR a coin toss in which you will get [insert 1-10 from below] if you flip heads or nothing if you flip tails?