WHO REALLY WANTS TO BE A MILLIONAIRE? ESTIMATES OF RISK AVERSION FROM GAMESHOW DATA |
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| Authors: | Roger Hartley Gauthier Lanot Ian Walker |
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| Institution: | 1. Department of Economics, School of Social Sciences, The University of Manchester, Manchester M13 9PL, United Kingdom;2. Department of Economics, Ume? University, SE‐901 87 Ume?, Sweden;3. Department of Economics, The Management School, Lancaster University, Bailrigg, Lancaster LA1 4YX, United Kingdom |
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| Abstract: | This paper estimates the degree of risk aversion from one of the most popular TV gameshows ever. The format of the show is straightforward; it involves no strategic decision making; we have a large number of observations; and the prizes are cash, which is paid immediately and covers a large range: from £100 up to £1 million. We provide non‐parametric estimates of the utility function and then we test some parametric restrictions. We find that, although the restriction to CRRA utility is statistically rejected, a log function approximates the utility function quite well over a large range of potential winnings. Copyright © 2013 John Wiley & Sons, Ltd. |
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