@article{ref1,
title="Risk Aversion and Expected-Utility Theory: A Calibration Exercise",
journal="Journal of risk and uncertainty",
year="2007",
author="Schechter, Laura",
volume="35",
number="1",
pages="67-76",
abstract="Rabin (Econometrica 68(5):1281-1292, 2000) argues that, under expected-utility, observed risk aversion over modest stakes implies extremely high risk aversion over large stakes. Cox and Sadiraj (Games Econom. Behav. 56(1):45-60, 2006) have replied that this is a problem of expected-utility of wealth, but that expected-utility of income does not share that problem. We combine experimental data on moderate-scale risky choices with survey data on income to estimate coefficients of relative risk aversion using expected-utility of consumption. Assuming individuals cannot save implies an average coefficient of relative risk aversion of 1.92. Assuming they can decide between consuming today and saving for the future, a realistic assumption, implies quadruple-digit coefficients. This gives empirical evidence for narrow bracketing.   <p>Language: en</p>",
language="en",
issn="0895-5646",
doi="10.1007/s11166-007-9017-6",
url="http://dx.doi.org/10.1007/s11166-007-9017-6"
}