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Related Experiment Video

Updated: Jul 10, 2026

Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods

Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods

Published on: September 19, 2012

Risk preference instability across institutions: a dilemma.

Joyce Berg¹, John Dickhaut, Kevin McCabe

¹Department of Accounting, University of Iowa, Iowa City, IA, USA.

Proceedings of the National Academy of Sciences of the United States of America

|March 9, 2005

Summary

Individuals exhibit unstable risk preferences across different market institutions. Laboratory experiments reveal that risk attitudes vary significantly depending on the auction or bidding procedure used.

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An R-Based Landscape Validation of a Competing Risk Model

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Published on: September 16, 2022

Area of Science:

Behavioral Economics
Experimental Economics
Decision Theory

Background:

Understanding individual risk preferences is crucial for economic modeling.
Previous research often assumes stable risk preferences, but empirical evidence is mixed.

Purpose of the Study:

To investigate whether individuals' risk preferences remain consistent across different institutional settings.
To determine if risk attitudes are stable when the same individuals participate in various experimental markets.

Main Methods:

Laboratory experiments with cash-motivated subjects.
Utilized three distinct market institutions: a value elicitation procedure, an English clock auction, and a first-price auction.
Estimated individual risk coefficients for each institution and compared them.

Main Results:

Subjects displayed risk-loving behavior in English clock auctions.
Subjects exhibited risk-averse behavior in first-price auctions.
Behavior in the Becker, Degroot, and Marschack procedure was mixed (risk-loving and risk-averse).
Estimated risk coefficients were statistically different across the three institutions for the same individuals.

Conclusions:

Individual risk preferences are not stable across different institutional contexts.
The specific market design significantly influences observed risk-taking behavior.
Findings challenge the assumption of stable risk preferences in economic decision-making models.