Eliciting Risk Preferences: Example

Download the source code for this page
Return to the elicitation page

🎲
Below is a list of choices between getting $5 for sure (Option A) and getting $10 with some probability (Option B).
Your job is to make a choice on every row. Notice that Option B becomes more and more attractive as the probability increases.
At what probability would you switch from picking Option A to Option B?
I would switch at %
(Please enter a number between 0 and 100.)
(Important: it's in your best interest to report truthfully. If you want an explanation, click here)
Pick: Option A   OR Option B

How You Would Be Paid

If this question were chosen for payment, here's how you would be paid.

The list on the page gives you a choice between $5 for sure (Option A) and a risky lottery (Option B) in every row. The probability you type in tells us where you "switch" from choosing Option A to choosing Option B. Then one row will be chosen at random and you will be paid according to your choice in that row.

Notice that the way to get what you truly prefer on every row is to type in the probability that really would make you indifferent between the two options. If you lie about it, that will change your choices on some rows to be something you like less.

For example, suppose you would really only switch at a probability of 80% but you type in 30%. That doesn't change the lottery's odds. It means you pick Option B on every row from 31% and higher. (Try it below.) But suppose the "50% row" is chosen for payment: You'd end up with a 50% shot at $10 even though you would have preferred a sure $5. Thus, it's in your best interest to report your switch point truthfully.

Try it out below to see how it works. Type in a probability and watch the list update. (This is just an example; it won't affect your actual decision.)

At what probability would you switch from Option A to Option B? I would switch at %
Pick: Option A   OR Option B

When you're ready, close this pop-up to go back and make your actual decision.