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Revista Brasileira de Economia

Print version ISSN 0034-7140On-line version ISSN 1806-9134

Abstract

ALMEIDA, Sergio. Do as I Do, Not as I Say: Incentivization and the Relationship Between Cognitive Ability and Risk Aversion. Rev. Bras. Econ. [online]. 2019, vol.73, n.4, pp.413-434.  Epub Jan 27, 2020. ISSN 1806-9134.  https://doi.org/10.5935/0034-7140.20190019.

We study the relationship between cognitive ability and risk aversion under real and hypothetical choice conditions. Our experimental results suggest that the statistical relationship between cognitive ability and risk aversion is sensitive to incentive conditions of the choice problems used to elicit risk preferences. Individuals in the upper tail of the cognitive ability distribution are willing to take more risks. However, this holds only when choices involve hypothetical payoffs. When choices envolve monetary incentives, this correlation is not significant. Results are robust to using alternative measures of cognitive ability.

Keywords : Cognitive ability; risk-preference elicitation; risk-preferences; hypothetical and real choices; incentives.

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