Is There a Life After
Holt and Laury (2002)?
Ganna Pogrebna
[email protected]
www.gannapogrebna.com
March 11, 2010
GvP
Holt and Laury (2002) Procedure
Relatively “Safe” Option
Relatively “Risky” Option
1/10 of 2.00 LCU, 9/10 of 1.60 LCU
1/10 of 3.85 LCU, 9/10 of 0.10 LCU
2/10 of 2.00 LCU, 8/10 of 1.60 LCU
2/10 of 3.85 LCU, 8/10 of 0.10 LCU
3/10 of 2.00 LCU, 7/10 of 1.60 LCU
3/10 of 3.85 LCU, 7/10 of 0.10 LCU
4/10 of 2.00 LCU, 6/10 of 1.60 LCU
4/10 of 3.85 LCU, 6/10 of 0.10 LCU
5/10 of 2.00 LCU, 5/10 of 1.60 LCU
5/10 of 3.85 LCU, 5/10 of 0.10 LCU
6/10 of 2.00 LCU, 4/10 of 1.60 LCU
6/10 of 3.85 LCU, 4/10 of 0.10 LCU
7/10 of 2.00 LCU, 3/10 of 1.60 LCU
7/10 of 3.85 LCU, 3/10 of 0.10 LCU
8/10 of 2.00 LCU, 2/10 of 1.60 LCU
8/10 of 3.85 LCU, 2/10 of 0.10 LCU
9/10 of 2.00 LCU, 1/10 of 1.60 LCU
9/10 of 3.85 LCU, 1/10 of 0.10 LCU
10/10 of 2.00 LCU, 0/10 of 1.60 LCU
10/10 of 3.85 LCU, 0/10 of 0.10 LCU
GvP
Popularity of Holt and Laury (2002)

Google Scholar:
 Holt and Laury (2002): 6,350 citations
 Eckel and Grossman (2002): 411 citations
 DoSpeRT Scale by Weber et al. (2002): 54 citations

JSTOR:
 Holt and Laury (2002): 65 citations
 Eckel and Grossman (2002): 29 citations
 DoSpeRT Scale by Weber et al. (2002): 6 citations
GvP
Virtues and Vices

Virtues:




please the referees
cheap and easy to implement
“relative” flavor
Vices:




not much heterogeneity in the data
(majority of participants “slightly risk averse”/ “risk averse”)
inconsistent participants cannot be classified
may produce results that are not robust
assumes CRRA utility function
GvP
One Empirical Observation
Holt and Laury Measure (HL)
Rank Description
0-1
Self-Reported Measure (SR)
Rank Description
highly risk seeking
1
very risk loving
2
very risk seeking
2
risk loving
3
risk seeking
3
slightly risk loving
4
risk neutral
4
neutral
5
slightly risk averse
5
slightly risk averse
6
risk averse
6
risk averse
7
very risk averse
7
very risk averse
8
highly risk averse
9-10 extremely risk averse
GvP
One Empirical Observation (continued)

Innsbruck, Austria (2006-2007) 161 participants
Risk
seeking
Risk seeking
HL
Risk neutral
Risk averse
SR
Risk
Risk
neutral averse
6
24
2
5
2
4
10
33
62
39
17
118
92
46
23
p=0.041
p=0.000
GvP
Controlling for Gender

Innsbruck, Austria (2006-2007) 161 participants
MEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
6
1
2
9
Risk neutral
16
3
4
23
Risk averse
40
18
8
66
62
22
14
WOMEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
0
1
0
1
Risk neutral
8
2
0
10
Risk averse
22
21
9
52
30
24
9
One Empirical Observation (continued)

Berlin, Germany (2008) 184 participants
Risk
seeking
Risk seeking
HL
Risk neutral
Risk averse
SR
Risk
Risk
neutral averse
13
19
2
11
1
7
16
37
61
44
26
131
93
57
34
p=0.470
p=0.000
GvP
Controlling for Gender

Berlin, Germany (2008) 184 participants
MEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
8
1
1
10
Risk neutral
10
5
4
19
Risk averse
35
21
14
70
53
27
19
WOMEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
5
1
0
6
Risk neutral
9
6
3
18
Risk averse
26
23
12
61
40
30
15
One Empirical Observation (continued)

New York, USA (2007-2009) 562 participants
Risk
seeking
Risk seeking
HL
Risk neutral
Risk averse
SR
Risk
Risk
neutral averse
45
96
5
30
4
15
54
141
297
47
23
367
438
82
42
p=0.000
p=0.000
GvP
Controlling for Gender

New York, USA (2007-2009) 562 participants
MEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
36
1
3
40
Risk neutral
71
5
4
80
Risk averse
214
9
5
228
321
15
12
WOMEN
SR
HL
Risk seeking
Risk neutral
Risk averse
Risk seeking
9
4
1
14
Risk neutral
25
25
11
61
Risk averse
83
38
18
139
117
67
30
Possible Explanations and Questions
Incentives
 “Risk” overconfidence
 People do not have CRRA utility function

Which measure provides a “correct”
representation of individual risk attitude?
Which measure has an impact on behavior:
HL or SR?
GvP