WHO REALLY WANTS TO BE A MILLIONAIRE? ESTIMATES OF RISK AVERSION FROM GAMESHOW DATA | Zendy

Hartley Roger | Zendy; Lanot Gauthier | Zendy; Walker Ian | Zendy

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WHO REALLY WANTS TO BE A MILLIONAIRE? ESTIMATES OF RISK AVERSION FROM GAMESHOW DATA

Author(s) -

Hartley Roger,

Lanot Gauthier,

Walker Ian

Publication year - 2013

Publication title -

journal of applied econometrics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 2.878

H-Index - 99

eISSN - 1099-1255

pISSN - 0883-7252

DOI - 10.1002/jae.2353

Subject(s) - risk aversion (psychology) , econometrics , range (aeronautics) , function (biology) , economics , cash , parametric statistics , nonparametric statistics , cash flow , mathematical economics , expected utility hypothesis , mathematics , statistics , finance , materials science , evolutionary biology , composite material , biology

SUMMARY 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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