Article

The risk elicitation puzzle

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Abstract

Evidence shows that people’s preference for risk changes considerably when measured using different methods, which led us to question whether the common practice of using a single behavioural elicitation method (EM) reflects a valid measure. The present study addresses this question by examining the across-methods consistency of observed risk preferences in 1,507 healthy participants using six EMs. Our analyses show that risk preferences are not consistent across methods when operationalized on an absolute scale, a rank scale or the level of model parameters of cumulative prospect theory. This is at least partly explained by the finding that participants do not consistently follow the same decision strategy across EMs. After controlling for methodological and human factors that may impede consistency, our results challenge the view that different EMs manage to stably capture risk preference. Instead, we interpret the results as suggesting that risk preferences may be constructed when they are elicited, and different cognitive processes can lead to varying preferences.

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Acknowledgements

This paper benefited from many helpful comments from the members of the Center for Economic Psychology at the University of Basel. We thank S. Goss and L. Wiles for editing this manuscript. This work was supported by the Swiss National Science Foundation with a grant to J.R. and R.H. (CRSII1_136227). The funders had no role in study design, data collection and analysis, decision to publish or preparation of the manuscript.

Author information

Affiliations

  1. Economic Psychology, Department of Psychology, University of Basel, 4055, Basel, Switzerland

    • Andreas Pedroni
    • , Gilles Dutilh
    •  & Jörg Rieskamp
  2. Methods of Plasticity Research, Department of Psychology, University of Zurich, 8050, Zurich, Switzerland

    • Andreas Pedroni
  3. Center for Cognitive and Decision Sciences, Department of Psychology, University of Basel, 4055, Basel, Switzerland

    • Renato Frey
  4. Center for Adaptive Rationality, Max Planck Institute for Human Development, 14195, Berlin, Germany

    • Renato Frey
    •  & Ralph Hertwig
  5. Faculty of Business and Economics (HEC Lausanne), University of Lausanne, 1015, Lausanne, Switzerland

    • Adrian Bruhin
    •  & Ralph Hertwig

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Contributions

A.P., R.F., A.B., G.D., R.H. and J.R. designed the research and wrote the paper. A.P. and R.F. performed the experimental studies. A.P., R.F. and A.B. analysed the data.

Competing interests

The authors declare no competing interests.

Corresponding author

Correspondence to Andreas Pedroni.

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  1. Supplementary Information

    Supplementary Figures 1–6, Supplementary Tables 1–7, Supplementary Discussion.

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