Estimating Risk Attitudes in Denmark: A Field Experiment

We estimate individual risk attitudes using controlled experiments in the field in Denmark. These risk preferences are elicited by means of field experiments involving real monetary rewards. The experiments were carried out across Denmark using a representative sample of 253 people between 19 and 75 years of age. Risk attitudes are estimated for various individuals differentiated by socio-demographic characteristics such as income and age. Our results indicate that the average Dane is risk averse, and that risk neutrality is an inappropriate assumption to apply. We also find that risk attitudes vary significantly with respect to several important sociodemographic variables. Our results consistently support the need to recognize the heterogeneity of risk attitudes across individual subjects, as well as the need to use flexible utility functions that do not impose strong restrictions on estimates of risk attitudes on an a priori basis. These findings have important implications for the characterization of risk attitudes in policy applications, theoretical modeling, and experimental economics.