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Publisher: Journals Gateway
The Review of Economics and Statistics (2022) 104 (4): 705–717.
Published: 01 July 2022
AbstractView article PDF
Higher-order risk preferences are important determinants of economic behavior. We apply insights from behavioral economics: we measure higher-order risk preferences for pure gains and losses. We find a reflection effect not only for second-order risk preferences, as did Kahneman and Tversky ( 1979 ), but also for higher-order risk preferences: we find risk aversion, prudence and intemperance for gains and much more risk-loving preferences, imprudence and temperance for losses. These findings are at odds with a universal preference for combining good with bad or good with good, which previous results suggest may underlie higher-order risk preferences.
Includes: Supplementary data