Bleichrodt, H & P. van Bruggen
Review of Economics and
Statistics – (2022) 104 (4) 705–717


Abstract: Higher-order risk preferences are important determinants of eco-nomic behavior. We apply insights from behavioral economics: we measure higher-order risk preferences for pure gains and losses. We find a reflec-tion effect not only for second-order risk preferences, as did Kahneman and Tversky (1979), but also for higher-order risk preferences: we find risk aversion, prudence and intemperance for gains and much more risk-loving preferences, imprudence and temperance for losses. These findings are at odds with a universal preference for combining good with bad or good
with good, which previous results suggest may underlie higher-order risk preferences.