Ambiguity and risk measures in the lab and students’ real-life borrowing behavior

Kim Fairley; Utz Weitzel

doi:10.1016/j.socec.2016.12.001

Ambiguity and risk measures in the lab and students’ real-life borrowing behavior

Kim Fairley^*
, Utz Weitzel

^*Corresponding author for this work

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

This study analyzes the external validity of experimentally elicited ambiguity aversion, likelihood insensitivity and risk aversion on real-life decision-making in the field of student loans. Our main finding is that ambiguity aversion, likelihood insensitivity and risk aversion are not related to the decision to take out a student loan nor to the amount students decide to borrow, conditional on having a loan. We discuss our results in the context of recent advances to relate lab measures of ambiguity aversion and likelihood insensitivity to real economic decisions.

Original language	English
Pages (from-to)	85-98
Number of pages	14
Journal	Journal of Behavioral and Experimental Economics
Volume	67
DOIs	https://doi.org/10.1016/j.socec.2016.12.001
Publication status	Published - 1 Apr 2017
Externally published	Yes

Keywords

Ambiguity aversion
Borrowing behavior
Likelihood insensitivity
Risk aversion
Student loans

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10.1016/j.socec.2016.12.001

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abstract = "This study analyzes the external validity of experimentally elicited ambiguity aversion, likelihood insensitivity and risk aversion on real-life decision-making in the field of student loans. Our main finding is that ambiguity aversion, likelihood insensitivity and risk aversion are not related to the decision to take out a student loan nor to the amount students decide to borrow, conditional on having a loan. We discuss our results in the context of recent advances to relate lab measures of ambiguity aversion and likelihood insensitivity to real economic decisions.",

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AB - This study analyzes the external validity of experimentally elicited ambiguity aversion, likelihood insensitivity and risk aversion on real-life decision-making in the field of student loans. Our main finding is that ambiguity aversion, likelihood insensitivity and risk aversion are not related to the decision to take out a student loan nor to the amount students decide to borrow, conditional on having a loan. We discuss our results in the context of recent advances to relate lab measures of ambiguity aversion and likelihood insensitivity to real economic decisions.

KW - Ambiguity aversion

KW - Borrowing behavior

KW - Likelihood insensitivity

KW - Risk aversion

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ER -

Ambiguity and risk measures in the lab and students’ real-life borrowing behavior

Abstract

Keywords

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