Consider the following five rows of choices between lottery A and lottery B. Basedon these, discuss what would be the choices of risk-averse, risk-neutral, or riskseeking individuals over the five rows.
Row Lottery A Lottery B
1 Win €110 or €0 with 50% probability Win €15 with 100% probability
2 Win €110 or €0 with 50% probability Win €35 with 100% probability
3 Win €110 or €0 with 50% probability Win €55 with 100% probability
4 Win €110 or €0 with 50% probability Win €75 with 100% probability
5 Win €110 or €0 with 50% probability Win €95 with 100% probability
Describe the methodology employed by Dohmen et al. (2011) to measure individual
risk preferences and outline the main findings of the study.
Basedon these, discuss what would be the choices of risk-averse, risk-neutral, or riskseeking individuals over the five rows.
