Is Risk Aversion Related to Asymmetric Information Suggested by Cheap Talk and Decision Making Time under Uncertainty?: Experimental Economics Approach
Publisher : Korea Insurance Research Institute
Research Area : Business Management
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We propose a supplemented eliciting method of measuring risk aversion through a laboratory experiment to overcome disadvantages of the multiple pricing list format developed by Holt and Laury (2002) and to standardize the risk aversion ranking by quantile normalization. Our method does not adhere to any specific utility function and is free of the framing effect or the multiple switching problem. Furthermore, with the new measure of risk aversion, we examine how individuals change risk attitude and decision making time when they face new informational disadvantages, i.e., less information about asset markets than experts. Decision making time gets shorter and risk aversion rises significantly when individuals perceive themselves informationally disadvantaged.
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