Authors: Jan-Erik Lönnqvist, Markku Verkasalo, Gari Walkowitz and Philipp C. Wichardt

Abstract: This paper compares two prominent empirical measures of individual risk attitudes – the Holt and Laury (2002) lottery-choice task and the multi-item questionnaire advocated by Dohmen, Falk, Huffman, Schupp, Sunde and Wagner (forthcoming) – with respect to (a) their correlation with actual risk-taking behaviour in the lab – here the amount sent in a trust game, and (b) their within-subject stability over time (one year). As it turns out, only the questionnaire measure is correlated with actual risk-taking behaviour (both studies) and with the Big Five personality measure (gathered prior to study 1); and the measures themselves are uncorrelated (both studies). Most importantly, however, both individual risk-taking behaviour and the questionnaire measure exhibit a significant high test-retest stability (r = 0.70 and r = 0.79, resp.), while virtually no such stability is present in the lottery-choice task. Thus, the results suggest that the questionnaire measure is more reliable in eliciting individual risk attitudes than the lottery-choice task. Moreover, with respect to trust, the data further support the conjecture that trusting behaviour indeed has a component which itself is a stable individual characteristic (Glaeser, Laibson, Scheinkman and Soutter, 2000).

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Authors: Marion Eberlein and Gari Walkowitz

Abstract: In this paper we experimentally investigate whether the so-called in-group/out-group bias leads to a favoring of own team members as candidates in promotion (by voting for them) relative to other teams and their members. In contrast to psychological approaches, mon- etary incentives for voting choices are implemented and objective performance criteria defined and thus the extent of the in-group/out-group bias is exactly measured. Our data show that face-to-face interaction with team members leads more subjects to favor own team-mates than in anonymous interaction. Moreover, not only the frequency but also the average extent of positive team identity is higher with face-to-face interaction according to objective performance measures. A further finding suggests that only anonymous team interaction often leads to substantial discrimination of own team members (i.e., negative team identity), which also is an interesting new finding and extends previous indings of psychologists on the in-group/out-group bias.

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Authors: Daniel Wiesen and Sebastian Ebert

Abstract: We propose an experimental method to test individuals for prudence (i.e. downside risk aversion) outside the expected utility framework. Our method relies on a novel representation of compound lotteries which allows for a systematic parameterization that captures the full generality of prudence. Therefore, we develop a general technique for lottery calibration in experiments. Since we investigate a very subtle third-order property we test our method in the laboratory employing a factorial design. We find that it yields robust results and that prudence is observed on the aggregate as well as on the individual level. Further we show that preferences based on statistical moments, in particular skewness seeking, can at most approximately explain individuals’ behavior in the experiment.

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