| Field | Before | After |
|---|---|---|
| Field Abstract | Before This experiment investigates the causal impact of exogenous income shocks on individuals' risk preferences, specifically focusing on higher-order risk attitudes such as prudence and temperance. Building on the theoretical framework of higher-order risk attitudes and motivated by mixed empirical evidence on the effect of shocks on risk behavior, the study employs a between-subjects design that orthogonally varies initial experimental endowments ($2, $6, or $10) and the occurrence of income shocks. Participants, recruited from a nationally representative online panel (Forthright Access), are randomly assigned to one of seven treatment conditions that systematically isolate income shocks from wealth effects. In Stage I, subjects learn about their endowment source; in Stage II, a risky investment task (adapted from Gneezy and Potters, 1997) elicits risk aversion via investment choices under uncertainty; and in Stage III, lottery selection tasks measure both basic risk preferences (following Eckel and Grossman, 2008) and higher-order attitudes (following Noussair et al., 2014). The experiment aims to test whether shock-induced variations in endowment generate distributions of risk preferences that differ from those arising solely from deterministic changes. Additionally, the study examines the interrelationships among risk aversion, prudence, and temperance across treatment conditions. Outcomes from this research will contribute to a clearer understanding of how exogenous shocks affect decision-making under uncertainty and inform both theoretical models and policy designs to mitigate shocks' economic impacts. | After This experiment investigates the causal impact of exogenous income shocks on individuals' risk preferences, specifically focusing on higher-order risk attitudes such as prudence and temperance. Building on the theoretical framework of higher-order risk attitudes and motivated by mixed empirical evidence on the effect of shocks on risk behavior, the study employs a between-subjects design that orthogonally varies initial experimental endowments ($20, $60, or $100) and the occurrence of income shocks. Participants, recruited from a nationally representative online panel (Forthright Access), are randomly assigned to one of seven treatment conditions that systematically isolate income shocks from wealth effects. In Stage I, subjects learn about their endowment source; in Stage II, a risky investment task (adapted from Gneezy and Potters, 1997) elicits risk aversion via investment choices under uncertainty; and in Stage III, lottery selection tasks measure both basic risk preferences (following Eckel and Grossman, 2008) and higher-order attitudes (following Noussair et al., 2014). The experiment aims to test whether shock-induced variations in endowment generate distributions of risk preferences that differ from those arising solely from deterministic changes. Additionally, the study examines the interrelationships among risk aversion, prudence, and temperance across treatment conditions. Outcomes from this research will contribute to a clearer understanding of how exogenous shocks affect decision-making under uncertainty and inform both theoretical models and policy designs to mitigate shocks' economic impacts. |
| Field Last Published | Before April 22, 2025 09:44 AM | After May 08, 2025 04:47 PM |
| Field Intervention (Public) | Before We use a controlled economic experiment to assess the relationship between shocks and higher-order risk attitudes. Particularly, we study if previous apparent discrepancies are generated by the impossibility of field data separating the effects of the income shocks on wealth from those with risk attitudes. To do so, we propose a between-subjects experiment in which we vary the amount of initial experimental endowments (wealth) that subjects receive and the occurrence or not of the shock. To capture these relationships from a broader set of subjects than college students, the experiment is implemented via Forthright Access, an online platform with a representative sample of the U.S. population. We exogenously isolate shocks from wealth to assess their independent effect on higher-order risk preferences. We implement an experiment with seven randomly assigned treatments between subjects, as described in Table 1. Table 1. Treatments Endowment\Shock Deterministic Shock $2 Deterministic-$2 Negative Shock-$2 (Negative shock from a 50% chance of a ($2, $6) bundle) $6 Deterministic-$6 Positive Shock-$6 (Positive shock from a 50% chance of a ($2, $6) bundle) Negative Shock-$6 (Negative shock from a 50% chance of a ($6, $10) bundle) $10 Deterministic-$10 Positive Shock-$10 (Positive shock from a 50% chance of a ($6, $10) bundle) | After We use a controlled economic experiment to assess the relationship between shocks and higher-order risk attitudes. Particularly, we study if previous apparent discrepancies are generated by the impossibility of field data separating the effects of the income shocks on wealth from those with risk attitudes. To do so, we propose a between-subjects experiment in which we vary the amount of initial experimental endowments (wealth) that subjects receive and the occurrence or not of the shock. To capture these relationships from a broader set of subjects than college students, the experiment is implemented via Forthright Access, an online platform with a representative sample of the U.S. population. We exogenously isolate shocks from wealth to assess their independent effect on higher-order risk preferences. We implement an experiment with seven randomly assigned treatments between subjects, as described in Table 1. Table 1. Treatments Endowment\Shock Deterministic Shock $20 Deterministic-$20 Negative Shock-$20 (Negative shock from a 50% chance of a ($20, $60) bundle) $60 Deterministic-$60 Positive Shock-$60 (Positive shock from a 50% chance of a ($20, $60) bundle) Negative Shock-$60 (Negative shock from a 50% chance of a ($60, $100) bundle) $100 Deterministic-$100 Positive Shock-$100 (Positive shock from a 50% chance of a ($60, $100) bundle) |
| Field Primary Outcomes (Explanation) | Before 1. Risky Investment Task (Gneezy and Potters, 1997): The primary outcome is the proportion of the endowment invested in the risky asset, where a higher proportion indicates greater risk tolerance, while a lower proportion shows higher risk aversion. Do we differentiate between the 2.5 and 5? 2. Eckel and Grossman Gamble Task (2008): The primary outcome is the choice of a gamble from six ordered lotteries, where higher numbers indicate lower risk aversion. 3. Risk Aversion Measure (Noussair et al., 2014): Risk aversion will be measured as the number of safe choices made among the five decisions involving a sure payoff and a risky lottery. 4. Prudence Measure (Noussair et al., 2014): Prudence will be measured as the number of prudent choices made among the five decisions for prudence. 5. Temperance Measure (Noussair et al., 2014): Temperance will be measured as the number of temperate choices made among the five decisions for temperance. Following previous literature (Deck & Schlesinger, 2010; Ebert & Wiesen, 2014; Noussair et al., 2014; Xu et al., 2024), the number of risk-averse, prudent, and temperate choices will be interpreted as a measure of the strength of these higher-order risk attitudes. | After 1. Risky Investment Task (Gneezy and Potters, 1997): The primary outcome is the proportion of the endowment invested in the risky asset, where a higher proportion indicates greater risk tolerance, while a lower proportion shows higher risk aversion. 2. Eckel and Grossman Gamble Task (2008): The primary outcome is the choice of a gamble from six ordered lotteries, where higher numbers indicate lower risk aversion. 3. Risk Aversion Measure (Noussair et al., 2014): Risk aversion will be measured as the number of safe choices made among the five decisions involving a sure payoff and a risky lottery. 4. Prudence Measure (Noussair et al., 2014): Prudence will be measured as the number of prudent choices made among the five decisions for prudence. 5. Temperance Measure (Noussair et al., 2014): Temperance will be measured as the number of temperate choices made among the five decisions for temperance. Following previous literature (Deck & Schlesinger, 2010; Ebert & Wiesen, 2014; Noussair et al., 2014; Xu et al., 2024), the number of risk-averse, prudent, and temperate choices will be interpreted as a measure of the strength of these higher-order risk attitudes. |
| Field Experimental Design (Public) | Before We use a controlled economic experiment to assess the relationship between shocks and higher-order risk attitudes. We study whether previous apparent discrepancies are generated by the impossibility of field data separating the effects of income shocks on wealth from those with risk attitudes. To do so, we propose a between-subjects experiment in which we vary the amount of initial experimental endowments (wealth) that subjects receive and the occurrence or not of the shock. | After We use a controlled economic experiment to assess the relationship between shocks and higher-order risk attitudes. We study whether previous apparent discrepancies are generated by the impossibility of field data separating the effects of income shocks on wealth from those with risk attitudes. To do so, we propose a between-subjects experiment in which we vary the amount of initial experimental endowments (wealth) that subjects receive and the occurrence or not of the shock. There is a 10% chance of receiving a payment. After completing all tasks, participants will spin a digital roulette to determine if they are selected for payment, with one round randomly chosen to determine their payment. |
| Field Randomization Method | Before The computer will do randomization. . The randomization will be conducted within the Otree experimental platform; each individual will be randomly assigned to a different treatment with equal probability. | After The computer will do randomization. The randomization will be conducted within the Otree experimental platform; each individual will be randomly assigned to a different treatment with equal probability. |
| Field Planned Number of Clusters | Before as many clusters as individuals observations | After as many clusters as individual observations |
| Field Intervention (Hidden) | Before In Stage I, subjects learn their endowment and the source of it. In Stage II, subjects will perform an investment task to measure their risk aversion (Gneezy & Potters 1997). This tool has previously been employed to assess risk tolerance for economic shocks (Cohn et al., 2015; Holden & Tilahun, 2021). In this simple risk elicitation task, participants will be asked how much of their initial endowment based on the random treatment assignment in Stage I ($2, $6, $10) they wish to invest in a risky option and how much to keep. The invested amount yields a dividend of 2.5 for 4 rounds and a dividend of 5 for the other four rounds with a 50% probability. The decision maker keeps the money not invested. In Stage III, subjects will perform an additional lottery selection task to measure attitudes toward risk (Eckel and Grossman, 2008). More specifically, subjects select a lottery of their preference from six available options (Eckel and Grossman, 2008). Each lottery has the same outcome probabilities but varies the payments of the low and high outcomes. Subsequently, subjects complete 17 binary selection lotteries designed to capture higher-order risk attitudes following Noussair et al. (2014). Table 2 describes the 17 lottery decisions presented in are grouped into four parts: five choices to assess risk aversion by comparing a sure payoff with a risky lottery; five choices to measure prudence, defined as the preference to assign unavoidable risks to higher income states rather than lower ones; five choices to assess temperance, reflecting the preference to spread independent risks across states rather than concentrating them; and two additional choices to test relative risk aversion and prudence under expected utility theory. The choice of the left lottery indicates risk aversion, prudence, and temperance. Left Lottery Right Lottery Risk Aversion 1 20 [65_5] Risk Aversion 2 25 [65_5] Risk Aversion 3 30 [65_5] Risk Aversion 4 35 [65_5] Risk Aversion 5 40 [65_5] Prudence 1 [(90+ [20_-20]) _60] [(90_ (60+ [20_-20])] Prudence 2 [(90+ [10_-10]) _60] [(90_ (60+ [10_-10])] Prudence 3 [(90+ [40_-40]) _60] [(90_ (60+ [40_-40])] Prudence 4 [(135+ [30_-30]) _90] [(135_ (90+ [30_-30])] Prudence 5 [(65+ [20_-20]) _35] [(65_ (35+ [20_-20])] Temperance 1 [(90+ [30_-30]) _ (90+ [30_-30])] [(90_ (90+ [30_-30] + [30_-30])] Temperance 2 [(90+ [30_-30]) _ (90+ [10_-10])] [(90_ (90+ [30_-30] + [10_-10])] Temperance 3 [(90+ [30_-30])_(90+[50_-50])] [(90_ (90+ [30_-30] + [50_-50])] Temperance 4 [(30+ [10_-10]) _ (30+ [10_-10])] [(30_ (30+ [10_-10] + [10_-10])] Temperance 5 [(70+ [30_-30]) _ (70+ [30_-30])] [(70_ (70+ [30_-30] + [30_-30])] Ra_EU1 [40_30] [50_24] Prud_EU2 [(50+ [25_-25]) _30] [(50_ (30+ [15_-15])] Finally, participants complete a short questionnaire to assess sociodemographic and personality dimensions relevant to risk and shock behavior. Table 3 briefly provides a chronology of the tasks with the number of choices or questions per task and source. Table 3. Chronology of tasks Task Observed choices per subject Source Task 1 Risk Aversion 8 Gneezy & Potters (1997) Task 2 RA Simple 1 Eckel and Grossman 2008 Task 2 Risk Aversion 5 Noussair et al., (2014) Task 2 Prudence 5 Noussair et al., (2014) Task 2 Temperance 5 Noussair et al., (2014) Task 2 RA EU1 1 Noussair et al., (2014) Task 2 PRudEU2 1 Noussair et al., (2014) Questionnaire (Ten-Item Personal Information) 10 Gosling, S. D., Rentfrow, P. J., & Swann, W. B., Jr. (2003). Further descriptions of our experimental tasks can be found in Eckel & Grossman (2008), Gneezy & Potters (1997), and Noussair et al. (2014). The Forthright Access panel provides additional socio-demographics, including age, nationality, residency, education, ethnicity, employment, gender, income, marital status, political ideology, religion, sexual orientation, etc. | After In Stage I, subjects learn their endowment and the source of it. In Stage II, subjects will perform an investment task for 4 rounds to measure their risk aversion (Gneezy & Potters 1997). This tool has previously been employed to assess risk tolerance for economic shocks (Cohn et al., 2015; Holden & Tilahun, 2021). In this simple risk elicitation task, participants will be asked how much of their initial endowment, based on the random treatment assignment in Stage I ($20, $60, $100), they wish to invest in a risky option and how much to keep. The invested amount yields a dividend of 2.5 or 5.0, depending on the round, with a 50% probability. The decision maker keeps the money not invested. In Stage III, subjects will perform an additional lottery selection task to measure attitudes toward risk (Eckel and Grossman, 2008). More specifically, subjects select a lottery of their preference from six available options (Eckel and Grossman, 2008). Each lottery has the same outcome probabilities but varies the payments of the low and high outcomes. Subsequently, subjects complete 17 binary selection lotteries designed to capture higher-order risk attitudes following Noussair et al. (2014). Table 2 describes the 17 lottery decisions presented in are grouped into four parts: five choices to assess risk aversion by comparing a sure payoff with a risky lottery; five choices to measure prudence, defined as the preference to assign unavoidable risks to higher income states rather than lower ones; five choices to assess temperance, reflecting the preference to spread independent risks across states rather than concentrating them; and two additional choices to test relative risk aversion and prudence under expected utility theory. The choice of the left lottery indicates risk aversion, prudence, and temperance. Left Lottery Right Lottery Risk Aversion 1 20 [65_5] Risk Aversion 2 25 [65_5] Risk Aversion 3 30 [65_5] Risk Aversion 4 35 [65_5] Risk Aversion 5 40 [65_5] Prudence 1 [(90+ [20_-20]) _60] [(90_ (60+ [20_-20])] Prudence 2 [(90+ [10_-10]) _60] [(90_ (60+ [10_-10])] Prudence 3 [(90+ [40_-40]) _60] [(90_ (60+ [40_-40])] Prudence 4 [(135+ [30_-30]) _90] [(135_ (90+ [30_-30])] Prudence 5 [(65+ [20_-20]) _35] [(65_ (35+ [20_-20])] Temperance 1 [(90+ [30_-30]) _ (90+ [30_-30])] [(90_ (90+ [30_-30] + [30_-30])] Temperance 2 [(90+ [30_-30]) _ (90+ [10_-10])] [(90_ (90+ [30_-30] + [10_-10])] Temperance 3 [(90+ [30_-30])_(90+[50_-50])] [(90_ (90+ [30_-30] + [50_-50])] Temperance 4 [(30+ [10_-10]) _ (30+ [10_-10])] [(30_ (30+ [10_-10] + [10_-10])] Temperance 5 [(70+ [30_-30]) _ (70+ [30_-30])] [(70_ (70+ [30_-30] + [30_-30])] Ra_EU1 [40_30] [50_24] Prud_EU2 [(50+ [25_-25]) _30] [(50_ (30+ [15_-15])] Finally, participants complete a short questionnaire to assess sociodemographic and personality dimensions relevant to risk and shock behavior. Table 3 briefly provides a chronology of the tasks with the number of choices or questions per task and source. Table 3. Chronology of tasks Task Observed choices per subject Source Task 1 Risk Aversion 8 Gneezy & Potters (1997) Task 2 RA Simple 1 Eckel and Grossman 2008 Task 2 Risk Aversion 5 Noussair et al., (2014) Task 2 Prudence 5 Noussair et al., (2014) Task 2 Temperance 5 Noussair et al., (2014) Task 2 RA EU1 1 Noussair et al., (2014) Task 2 PRudEU2 1 Noussair et al., (2014) Questionnaire (Ten-Item Personal Information) 10 Gosling, S. D., Rentfrow, P. J., & Swann, W. B., Jr. (2003). Further descriptions of our experimental tasks can be found in Eckel & Grossman (2008), Gneezy & Potters (1997), and Noussair et al. (2014). The Forthright Access panel provides additional socio-demographics, including age, nationality, residency, education, ethnicity, employment, gender, income, marital status, political ideology, religion, sexual orientation, etc. |
| Field Secondary Outcomes (End Points) | Before Correlation between risk aversion, prudence, and temperance | After Correlation between risk aversion, prudence, and temperance Time taken to complete each task The number of incorrect attempts participants make before answering comprehension questions correctly |
| Field Secondary Outcomes (Explanation) | Before | After Decision time might be used as a proxy for cognitive processing or emotional reactivity. As robustness checks, we will analyze whether positive or negative shocks lead to faster, more intuitive decisions or slower, more deliberate ones. The number of incorrect attempts to pass the comprehension checks serves as an indirect measure of attentiveness or understanding of the tasks. While we will include all participants in the main data analysis, we will conduct robustness checks based on the number of attempts to pass comprehension questions. We will use all participants in our sample for data analysis, but for robustness checks, we will categorize participants based on the number of attempts to correctly answer the attention/comprehension quiz to evaluate whether our results are driven by inattentive behavior or misunderstanding of the tasks. |
| Field | Before | After |
|---|---|---|
| Field Document | Before |
After
Relationship between shocks and HORA.docx
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SHA1:
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| Field | Value |
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| Field Document |
Value
AP_The Relationship Between Shocks and Higher.docx
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