Estimated Risk Preferences: Power and Normative Considerations

Date: 27 July 2018

There has been considerable progress in recent years in the development of experimental and econometric tools to allow structural estimation of risk preferences. Different models of decision-making involving risk are allowed for, and batteries of lotteries have been developed to better identify specific aspects of those models (e.g., probability weighting, loss aversion, violations of reduction of compound lotteries). A natural question now is how to rigorously evaluate the statistical power of these batteries when it comes to different types of inferences. A related question is the manner in which estimated risk preferences can be used to normatively evaluate behaviour. This focused workshop examines recent developments in these two aspects of the estimation of risk preferences.

The workshop is sponsored by CEAR Africa, a joint collaboration between the Center for the Economic Analysis of Risk (CEAR, cear.gsu.edu) at Georgia State University and RUBEN at the University of Cape Town.

See http://cear.gsu.edu/event-archives/estimated-risk-preferences-power-and-normative-considerations/ for further details.

Fundamentals of Behavioural Economics for Developing Economies

Date: 18 - 20 July 2018

The Research Unit in Behavioural Economics and Neuroeconomics (RUBEN) at the University of Cape Town is hosting a 3-day introductory course in behavioural economics and its applications to real world problems in developing countries.

  • The course is intended for an interdisciplinary participant group and applications are welcomed from individuals and/or teams from the private sector, the public sector, NPOs, and academic institutions interested in learning about behavioural economics and how it can be applied to their work. Specifically, the course is designed for individuals and teams interested in:
  • Creating awareness of behavioural economic principles for future planning purposes and policy design 
  • Designing behavioural solutions to address an internal (organisational/staff) challenge that aligns economic incentives and promotes productivity, efficiency, and effectiveness
  • Designing behavioural solutions to address an external social or business dilemma

Field Experiments, Risk, and Uncertainty in Development

Date: 3 - 7 February 2014

RUBEN and the Center for the Economic Analysis of Risk (CEAR, Georgia State University) jointly hosted a five-day training workshop on the use of field experiments in development, with an emphasis on the role of risk and uncertainty. The primary theme of the workshop was the need for tight connections between theory, experimental design, and econometric method. Topics covered during the workshop included:

  • Experimental methods: randomized control and measurement
  • Laboratory and field experiments
  • Estimating risk preferences
  • Estimating intertemporal risk preferences
  • Inferring risk perceptions
  • Risk, uncertainty and ambiguity
  • Calibrating hypothetical surveys with real experimental choices

This workshop intended to support the training of African researchers in world-class experimental economics research, and at the same time to facilitate research collaboration with leading behavioural and experimental economics researchers on African issues. The workshop took the form of structured lectures combined with practical sessions illustrating the development of research instruments and the analysis of results from these instruments. The workshop lecturers included: Professor Glenn Harrison, Professor Morten Lau, and Professor Elisabet Rutström.

The Economics of Gambling

Date: 27 - 29 January 2014

RUBEN and the Center for the Economic Analysis of Risk (CEAR, Georgia State University) jointly hosted a workshop on the Economics of Gambling. Gambling behaviour incorporates a range of attitudes towards risk, and perceptions of risk. It fundamentally challenges the methodologies of several traditional academic disciplines, particularly in its manifestations as ‘problem’ or ‘addictive’ gambling. But even in its most controlled forms, it raises puzzles. As Milton Friedman asked decades ago, how are we to understand the fact that many people pay for gambles with miniscule expected values, while simultaneously paying for insurance policies that could not possibly optimize utility for a person as risk loving as their gambling behaviour implies?

The longer-term objective of this workshop was to get together a group of academics with clear interests in the topic of gambling from a range of disciplines, ideally to help develop a multi-institution, multi-year research agenda. There are large, unexploited gains from having serious academic researchers get together more or less annually around this specific topic, and develop a tight network of researchers over a number of years. This workshop, capitalizing on discussions at the 2013 workshop held in Atlanta, again focussed mainly on gambling work by economists, but with added emphasis on regulatory policy towards gambling.

Behavioural and Experimental Economics: Policy Design and Evaluation Research (PODER)

Date: 7 - 10 July 2014

In 2014, Justine Burns organised the first PODER (Policy Design and Evaluation Research) summer workshop on behavioural and experimental economics. PODER is a multi-partner international training network, which provides training to doctoral students in the use of these techniques to design and evaluate policies to fight poverty. Professor Catherine Eckel, Professor Rick Wilson, and Professor Lori Bearman, all international experts in the design and use of economic experiments to evaluate development policy, delivered a series of lectures at this workshop.

The main components were lectures by leading researchers and participants’ presentations. Lecture topics included: the role of experimentation in development; calibrating policy with lab experiments; development through the lens of psychology; and trust, social preferences and exchange.

The Behavioural Econometrics of Risk and Time Preference

Date: 28 January - 2 February 2013

RUBEN and The Center for the Economic Analysis of Risk (CEAR) at Georgia State University jointly hosted a five-day training workshop on cutting-edge empirical methods used in estimating attitudes towards risk and time. The primary theme of the workshop was the need for tight connections between theory, experimental design, and econometric method. Topics covered during the workshop included:

  • Experimental methods: randomized control and measurement
  • Laboratory and field experiments
  • Estimating risk preferences assuming Expected Utility Theory (EUT)
  • Structural Estimation of Non-EUT Models: Rank Dependent Utility and Cumulative Prospect Theory
  • Estimating time preferences
  • Review of advanced topics in behavioural econometrics

This workshop intended to support the training of African researchers in world-class experimental economics research, and at the same time to facilitate research collaboration with leading behavioural and experimental economics researchers on African issues. The workshop took the form of structured lectures combined with practical STATA sessions. Workshop lectures included: Professor Glenn Harrison, Professor Morten Lau, and Professor Elisabet Rutström.

The Behavioural Econometrics of Risk, Uncertainty and Time Preference


Date: 23 - 27 January 2012

Among the most important variables affecting outcomes in microeconomic development initiatives among vulnerable groups are attitudes to risk and attitudes to the cost of delay. The evaluation of any proposed policy to help people respond to uncertainty should take into account the aversion that some may have to risk, their subjective risk perceptions, the manner in which risk-coping strategies might confound expectations of planners and agencies about future outcomes, and the extent to which intended beneficiaries of programs are able and willing to bear costs of delay. Many of the problems of development in Africa can be attributed, in large part, to aversion to risk, fear of losses, and unwillingness to invest in projects that have higher returns but over longer horizons.

RUBEN and the Center for the Economic Analysis of Risk (CEAR) at Georgia State University jointly hosted a five-day training workshop on cutting edge empirical methods used in estimating individual attitudes towards risk and time. The primary theme of the workshop was the need for tight connections between theory, experimental design, and econometric method. Topics covered during the workshop included:

  • Maximum Likelihood and the Structural estimation of risk attitudes under Expected Utility Theory (EUT)
  • Structural estimation of non-EUT models
  • Identification and joint estimation of risk attitudes, subjective beliefs, and time preferences
  • Heterogeneity and random coefficients
  • Pitfalls in behavioural econometrics
  • Ambiguity and uncertainty
  • Structural estimation and reduced form estimation

Workshop lectures included: Professor Glenn Harrison and Professor Warren Bickel.