It's not my money : an experiment on risk aversion and the house-money effect
The house-money effect -people's tendency to be more daring with easily-gotten money- is a behavioral pattern that poses questions about the external validity of experiments in economics: to what extent do people behave in experiments like they would have in a real-life situation, given that th...
- Autores:
-
Martínez Armas, Luis Roberto
Jaramillo Herrera, Christian Rafael
Roux Uribe, Nicolás de
Cárdenas Campo, Juan Camilo
- Tipo de recurso:
- Work document
- Fecha de publicación:
- 2010
- Institución:
- Universidad de los Andes
- Repositorio:
- Séneca: repositorio Uniandes
- Idioma:
- eng
- OAI Identifier:
- oai:repositorio.uniandes.edu.co:1992/8148
- Acceso en línea:
- http://hdl.handle.net/1992/8148
- Palabra clave:
- House-money effect
Risk aversion
Prospect theory
Economic experiment
External validity
Finanzas personales - Toma de decisiones - Modelos matemáticos
Riesgo (Finanzas) - Toma de decisiones - Modelos matemáticos
Teoría de los juegos
Economía - Metodología - Experimentos
C91, D03, D81
- Rights
- openAccess
- License
- http://creativecommons.org/licenses/by-nc-nd/4.0/
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| dc.title.none.fl_str_mv |
It's not my money : an experiment on risk aversion and the house-money effect |
| dc.title.alternative.none.fl_str_mv |
Este no es mi dinero : un experimento sobre aversión al riesgo y el efecto de 'dinero de la casa' |
| title |
It's not my money : an experiment on risk aversion and the house-money effect |
| spellingShingle |
It's not my money : an experiment on risk aversion and the house-money effect House-money effect Risk aversion Prospect theory Economic experiment External validity Finanzas personales - Toma de decisiones - Modelos matemáticos Riesgo (Finanzas) - Toma de decisiones - Modelos matemáticos Teoría de los juegos Economía - Metodología - Experimentos C91, D03, D81 |
| title_short |
It's not my money : an experiment on risk aversion and the house-money effect |
| title_full |
It's not my money : an experiment on risk aversion and the house-money effect |
| title_fullStr |
It's not my money : an experiment on risk aversion and the house-money effect |
| title_full_unstemmed |
It's not my money : an experiment on risk aversion and the house-money effect |
| title_sort |
It's not my money : an experiment on risk aversion and the house-money effect |
| dc.creator.fl_str_mv |
Martínez Armas, Luis Roberto Jaramillo Herrera, Christian Rafael Roux Uribe, Nicolás de Cárdenas Campo, Juan Camilo |
| dc.contributor.author.none.fl_str_mv |
Martínez Armas, Luis Roberto Jaramillo Herrera, Christian Rafael Roux Uribe, Nicolás de Cárdenas Campo, Juan Camilo |
| dc.subject.keyword.none.fl_str_mv |
House-money effect Risk aversion Prospect theory Economic experiment External validity |
| topic |
House-money effect Risk aversion Prospect theory Economic experiment External validity Finanzas personales - Toma de decisiones - Modelos matemáticos Riesgo (Finanzas) - Toma de decisiones - Modelos matemáticos Teoría de los juegos Economía - Metodología - Experimentos C91, D03, D81 |
| dc.subject.armarc.none.fl_str_mv |
Finanzas personales - Toma de decisiones - Modelos matemáticos Riesgo (Finanzas) - Toma de decisiones - Modelos matemáticos Teoría de los juegos Economía - Metodología - Experimentos |
| dc.subject.jel.none.fl_str_mv |
C91, D03, D81 |
| description |
The house-money effect -people's tendency to be more daring with easily-gotten money- is a behavioral pattern that poses questions about the external validity of experiments in economics: to what extent do people behave in experiments like they would have in a real-life situation, given that they play with easily-gotten house money? We ran an economic experiment with 66 students to measure the house-money effect on their risk preferences. They received an amount of money with which they made risky decisions involving losses and gains; a treatment group got the money 21 days in advance and a control group got it the day of the experiment. We find that, when facing possible losses, people in the treatment group showed a lower tolerance to risk than people in the control group. If the players are assumed to have a CRRA utility function and to behave according to expected-utility theory, the risk-attitude adjustment corresponds to an average increase of 1 in their risk aversion coefficient. While the exact pattern of this house-money adjustment differs by gender, it is not possible to determine the sign of this gender effect unambiguously. In any case, it is advisable to include credible controls for the house-money effect in experimental work in economics. |
| publishDate |
2010 |
| dc.date.issued.none.fl_str_mv |
2010 |
| dc.date.accessioned.none.fl_str_mv |
2018-09-27T16:50:52Z |
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2018-09-27T16:50:52Z |
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Documento de trabajo |
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http://purl.org/coar/version/c_970fb48d4fbd8a85 |
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info:eu-repo/semantics/workingPaper |
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http://purl.org/coar/resource_type/c_8042 |
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Text |
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https://purl.org/redcol/resource_type/WP |
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http://purl.org/coar/resource_type/c_8042 |
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1657-5334 |
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http://hdl.handle.net/1992/8148 |
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1657-7191 |
| dc.identifier.doi.none.fl_str_mv |
10.57784/1992/8148 |
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instname:Universidad de los Andes |
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reponame:Repositorio Institucional Séneca |
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repourl:https://repositorio.uniandes.edu.co/ |
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1657-5334 1657-7191 10.57784/1992/8148 instname:Universidad de los Andes reponame:Repositorio Institucional Séneca repourl:https://repositorio.uniandes.edu.co/ |
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http://hdl.handle.net/1992/8148 |
| dc.language.iso.none.fl_str_mv |
eng |
| language |
eng |
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Documentos CEDE No. 02 Enero de 2010 |
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https://ideas.repec.org/p/col/000089/006712.html |
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http://creativecommons.org/licenses/by-nc-nd/4.0/ |
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info:eu-repo/semantics/openAccess |
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openAccess |
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12 páginas |
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application/pdf |
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Universidad de los Andes, Facultad de Economía, CEDE |
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Universidad de los Andes, Facultad de Economía, CEDE |
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Universidad de los Andes |
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Al consultar y hacer uso de este recurso, está aceptando las condiciones de uso establecidas por los autores.http://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccesshttp://purl.org/coar/access_right/c_abf2Martínez Armas, Luis Robertoe736e5a4-0206-406f-aa48-5b27e899c90e500Jaramillo Herrera, Christian Rafael0e5bbbd4-0361-44cc-97f3-d7c21330666d500Roux Uribe, Nicolás de65d0d449-48ab-4759-a626-cc7702ead0b9400Cárdenas Campo, Juan Camilo76335002018-09-27T16:50:52Z2018-09-27T16:50:52Z20101657-5334http://hdl.handle.net/1992/81481657-719110.57784/1992/8148instname:Universidad de los Andesreponame:Repositorio Institucional Sénecarepourl:https://repositorio.uniandes.edu.co/The house-money effect -people's tendency to be more daring with easily-gotten money- is a behavioral pattern that poses questions about the external validity of experiments in economics: to what extent do people behave in experiments like they would have in a real-life situation, given that they play with easily-gotten house money? We ran an economic experiment with 66 students to measure the house-money effect on their risk preferences. They received an amount of money with which they made risky decisions involving losses and gains; a treatment group got the money 21 days in advance and a control group got it the day of the experiment. We find that, when facing possible losses, people in the treatment group showed a lower tolerance to risk than people in the control group. If the players are assumed to have a CRRA utility function and to behave according to expected-utility theory, the risk-attitude adjustment corresponds to an average increase of 1 in their risk aversion coefficient. While the exact pattern of this house-money adjustment differs by gender, it is not possible to determine the sign of this gender effect unambiguously. In any case, it is advisable to include credible controls for the house-money effect in experimental work in economics.El efecto de 'dinero de la casa' es la tendencia de las personas a ser más osadas con dinero obtenido sin dificultad. Este patrón de conducta genera interrogantes sobre la validez externa de los experimentos económicos, dado que los participantes en experimentos suelen recibir dinero suficiente para cubrir cualquier pérdida: ¿Hasta qué punto se comportan las personas igual en el experimento y en la vida real? Nosotros realizamos un experimento con 66 estudiantes para medir el efecto de 'dinero de la casa' en sus preferencias sobre riesgo. Los participantes recibieron una suma de dinero con la que tomaron decisiones riesgosas que incluían posibles pérdidas y ganancias. El grupo de tratamiento recibió el dinero 21 días antes de la sesión experimental mientras que el grupo de control recibió el dinero ese mismo día. Encontramos que en el escenario con posibilidad de pérdidas el grupo de tratamiento mostró menor tolerancia hacia el riesgo que el grupo de control. Si suponemos que los participantes tienen una función de utilidad CRRA y que se comportan acorde a la teoría de la utilidad esperada, el ajuste en el coeficiente de aversión al riesgo por efecto de 'dinero de la casa' tiene una magnitud promedio de 1. También encontramos que el efecto de 'dinero de la casa' no parece afectar por igual a hombres y mujeres, aunque es difícil establecer de manera precisa el sentido de esta heterogeneidad. En todo caso, es recomendable incluir controles para el efecto de 'dinero de la casa' en el trabajo experimental en economía.12 páginasapplication/pdfengUniversidad de los Andes, Facultad de Economía, CEDEDocumentos CEDE No. 02 Enero de 2010https://ideas.repec.org/p/col/000089/006712.htmlIt's not my money : an experiment on risk aversion and the house-money effectEste no es mi dinero : un experimento sobre aversión al riesgo y el efecto de 'dinero de la casa'Documento de trabajoinfo:eu-repo/semantics/workingPaperhttp://purl.org/coar/resource_type/c_8042http://purl.org/coar/version/c_970fb48d4fbd8a85Texthttps://purl.org/redcol/resource_type/WPHouse-money effectRisk aversionProspect theoryEconomic experimentExternal validityFinanzas personales - Toma de decisiones - Modelos matemáticosRiesgo (Finanzas) - Toma de decisiones - Modelos matemáticosTeoría de los juegosEconomía - Metodología - ExperimentosC91, D03, D81Facultad de EconomíaPublicationORIGINALdcede2010-02.pdfdcede2010-02.pdfapplication/pdf899941https://repositorio.uniandes.edu.co/bitstreams/8ae3ecc9-7068-465e-acea-de541a17b97c/download6698903f00ee40ab7e71dea47a6f9e80MD51TEXTdcede2010-02.pdf.txtdcede2010-02.pdf.txtExtracted texttext/plain23850https://repositorio.uniandes.edu.co/bitstreams/ac76d5dd-442c-479e-a4e5-035eb378021f/download2f668414bc91da43010f3aa305033822MD54THUMBNAILdcede2010-02.pdf.jpgdcede2010-02.pdf.jpgIM Thumbnailimage/jpeg3829https://repositorio.uniandes.edu.co/bitstreams/17b9fc02-175a-4f37-aded-a71add350b6b/downloadad5acfeb7bd6712484a158417fd7502bMD551992/8148oai:repositorio.uniandes.edu.co:1992/81482024-06-04 15:30:57.499http://creativecommons.org/licenses/by-nc-nd/4.0/open.accesshttps://repositorio.uniandes.edu.coRepositorio institucional Sénecaadminrepositorio@uniandes.edu.co |