An expected utility maximizer walks into a bar...

Daniel R. Burghart; Paul W. Glimcher; Stephanie C. Lazzaro

doi:10.1007/s11166-013-9167-7

An expected utility maximizer walks into a bar...

Daniel R. Burghart, Paul W. Glimcher, Stephanie C. Lazzaro

Neural Science

Research output: Contribution to journal › Article › peer-review

Abstract

We conducted field experiments at a bar to test whether blood alcohol concentration (BAC) correlates with violations of the generalized axiom of revealed preference (GARP) and the independence axiom. We found that individuals with BACs well above the legal limit for driving adhere to GARP and independence at rates similar to those who are sober. This finding led to the fielding of a third experiment to explore how risk preferences might vary as a function of BAC. We found gender-specific effects: Men did not exhibit variations in risk preferences across BACs. In contrast, women were more risk averse than men at low BACs but exhibited increasing tolerance towards risks as BAC increased. Based on our estimates, men and women's risk preferences are predicted to be identical at BACs nearly twice the legal limit for driving. We discuss the implications for policy-makers.

Original language	English (US)
Pages (from-to)	215-246
Number of pages	32
Journal	Journal of Risk and Uncertainty
Volume	46
Issue number	3
DOIs	https://doi.org/10.1007/s11166-013-9167-7
State	Published - Jun 2013

Keywords

Alcohol
Expected utility theory
Field experiment
Rationality
Risk aversion

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1007/s11166-013-9167-7

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title = "An expected utility maximizer walks into a bar...",

abstract = "We conducted field experiments at a bar to test whether blood alcohol concentration (BAC) correlates with violations of the generalized axiom of revealed preference (GARP) and the independence axiom. We found that individuals with BACs well above the legal limit for driving adhere to GARP and independence at rates similar to those who are sober. This finding led to the fielding of a third experiment to explore how risk preferences might vary as a function of BAC. We found gender-specific effects: Men did not exhibit variations in risk preferences across BACs. In contrast, women were more risk averse than men at low BACs but exhibited increasing tolerance towards risks as BAC increased. Based on our estimates, men and women's risk preferences are predicted to be identical at BACs nearly twice the legal limit for driving. We discuss the implications for policy-makers.",

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author = "Burghart, {Daniel R.} and Glimcher, {Paul W.} and Lazzaro, {Stephanie C.}",

note = "Funding Information: Acknowledgments All authors gratefully acknowledge valuable input from John Rotrosen, M.D., Bill Harbaugh, Mark Dean and Daniel Martin. Matthew Kelly and Michael Laba generously permitted us access to their bar and patrons. Bego{\~n}a Fernandez Diaz, Eric DeWitt, Maggie Grantner, Dino Levy, and Linnaea Ostroff provided valuable assistance with participant queuing. This work was supported by the U.S. National Institutes of Health (5R01NS054775 and 5F32MH084431).",

year = "2013",

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doi = "10.1007/s11166-013-9167-7",

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PY - 2013/6

Y1 - 2013/6

N2 - We conducted field experiments at a bar to test whether blood alcohol concentration (BAC) correlates with violations of the generalized axiom of revealed preference (GARP) and the independence axiom. We found that individuals with BACs well above the legal limit for driving adhere to GARP and independence at rates similar to those who are sober. This finding led to the fielding of a third experiment to explore how risk preferences might vary as a function of BAC. We found gender-specific effects: Men did not exhibit variations in risk preferences across BACs. In contrast, women were more risk averse than men at low BACs but exhibited increasing tolerance towards risks as BAC increased. Based on our estimates, men and women's risk preferences are predicted to be identical at BACs nearly twice the legal limit for driving. We discuss the implications for policy-makers.

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An expected utility maximizer walks into a bar...

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Keywords

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