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Risky Choice in the Limelight

van den Assem, Martijn J.; Baltussen, Guido; van Dolder, Dennie

Authors

Martijn J. van den Assem m.j.vanden.assem@vu.nl

Guido Baltussen baltussen@ese.eur.nl

Dennie van Dolder dennie.vandolder@nottingham.ac.uk



Abstract

This paper examines how risk behavior in the limelight differs from that in anonymity. In two separate experiments we find that subjects are more risk averse in the limelight. However, risky choices are similarly path dependent in the different treatments. Under both limelight and anonymous laboratory conditions, a simple prospect theory model with a path-dependent reference point provides a better explanation for subjects’ behavior than a flexible specification of expected utility theory. Additionally, our findings suggest that ambiguity aversion depends on being in the limelight, that passive experience has little effect on risk taking, and that reference points are determined by imperfectly updated expectations.

Journal Article Type Article
Publication Date 2016-05
Journal Review of Economics and Statistics
Print ISSN 0034-6535
Electronic ISSN 1530-9142
Publisher Massachusetts Institute of Technology Press
Peer Reviewed Peer Reviewed
Volume 98
Issue 2
Pages 318-332
APA6 Citation van den Assem, M. J., Baltussen, G., & van Dolder, D. (2016). Risky Choice in the Limelight. Review of Economics and Statistics, 98(2), 318-332. https://doi.org/10.1162/rest_a_00505
DOI https://doi.org/10.1162/rest_a_00505
Keywords decision making under risk, risky choice, risk preferences, risk aversion, ambiguity aversion, limelight, accountability, public scrutiny, experience, game show, natural experiment, laboratory experiment, expected utility theory, prospect theory
Publisher URL http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00505
Related Public URLs http://www.mitpressjournals.org/loi/rest
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the manuscript version of the article accepted for publication in Review of Economics and Statistics
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