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Handbook of the Economics of Risk and Uncertainty
book

Handbook of the Economics of Risk and Uncertainty

by Mark Machina, W. Kip Viscusi
November 2013
Beginner content levelBeginner
896 pages
35h 10m
English
North Holland
Content preview from Handbook of the Economics of Risk and Uncertainty
Charles A. Holt and Susan K. Laury
176
One tricky aspect of the analysis is that factors such as wealth and education may be
affected by risk aversion, especially for nonstudent subjects. Binswanger’s (1981) classic
paper deals with these issues by estimating a three-equation model in which risk aver-
sion, schooling, and wealth are endogenous. The model also includes a measure of inher-
ited wealth (market value of inherited land).
33
The only variable that was significant in
the risk aversion equation was a “luck” variable, defined on the basis of how often the
high payoff outcome had been obtained in prior decisions (recall that Binswanger visited ...
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Publisher Resources

ISBN: 9780444536853