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Essays On Risk And Incentives, Russell Engel

WCBT Faculty Publications

I use economic experiments to investigate individual behavior under uncertainty. The first essay examines the consistency of risk preferences over two institutions. The two institutions I use are the first price sealed bid auction and a Holt-Laury lottery. There is some controversy as to whether or not observed overbidding in first price auction is actually caused by risk aversion or simply consistent with it. Behavior in the Holt-Laury lottery being caused by risk aversion is not in dispute. By having the same subjects participate in both institutions, I show that subjects.risk preferences in the lottery are consistent with subjects' risk …