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Risk Attitudes, Randomization to Treatment, and self-selection into Experiments

Harrison, G.W.; Lau, M.I.; Rutström, E.E.

Authors

G.W. Harrison

E.E. Rutström



Abstract

Randomization to treatment is fundamental to statistical control in the design of experiments. However randomization implies some uncertainty about treatment condition, and individuals differ in their preferences towards taking on risk. Since human subjects often volunteer for experiments or are allowed to drop out of the experiment at any time if they want to, it is possible that the sample observed in an experiment might be biased because of the risk of randomization. On the other hand, the widespread use of a guaranteed show-up fee that is non-stochastic may generate sample selection biases of the opposite direction, encouraging more risk averse samples into experiments. We directly test these hypotheses that risk attitudes play a role in sample selection. Our results suggest that randomization bias does affect the overall level of risk aversion in the sample we observe, but that it does not affect the demographic mix of risk attitudes in the sample. We show that the common use of non-stochastic show-up fees can generate samples that are more risk averse than would otherwise have been observed.

Citation

Harrison, G., Lau, M., & Rutström, E. (2009). Risk Attitudes, Randomization to Treatment, and self-selection into Experiments. Journal of Economic Behavior and Organization, 70(3), 498-507. https://doi.org/10.1016/j.jebo.2008.02.011

Journal Article Type Article
Publication Date Jun 1, 2009
Deposit Date Oct 25, 2010
Journal Journal of Economic Behavior and Organization
Print ISSN 0167-2681
Electronic ISSN 2328-7616
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 70
Issue 3
Pages 498-507
DOI https://doi.org/10.1016/j.jebo.2008.02.011
Keywords Risk aversion, Randomization, Sample selection, Experiments.
Public URL https://durham-repository.worktribe.com/output/1547564