No. 5/2013: Income and choice under risk


This paper studies the relationship between income and risky choice in a eld ex- periment where stakes are of rst-order importance to the subjects' living standards. We combine observations of stopping decisions in a Norwegian game show with reliable data on each subject's income. Participants in the experiment are randomly drawn from a large subject pool that is representative of the Norwegian population. Our re- sults clearly indicate that people are risk-averse in making large-stake choices and that decision makers with high income are more willing to accept nancial risk.
JEL Classification: C9, C93, D81
Keywords: Risky choice; Field experiment