Measuring Risk Aversion Model-Independently
We propose a new method to elicit individuals' risk preferences. Similar to Holt and Laury\n(2002), we use a simple multiple price-list format. However, our method is based on a general\nnotion of increasing risk, which allows classifying individuals as more or less risk-averse\nwithout assuming a specic utility framework. In a laboratory experiment we compare both\nmethods. Each classies individuals almost identically as risk-averse, -neutral, or -seeking.\nHowever, classications of individuals as more or less risk-averse dier substantially. Moreover,\nour approach yields higher measures of risk aversion, and only with our method these\nmeasures are robust toward increasing stakes.