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Open Access Publications from the University of California

Risk Aversion and Theft as a Source of Risk


This paper seeks to show that the potential to lose money as a result of theft has adifferent effect on an individual’s risk aversion than the potential to lose money due to chance.This would indicate that an individual’s risk aversion is inconsistent under different scenarios,contrasting current literature that assumes an individual’s risk aversion is independent of thesituation they are in. We attempt to show this through an experiment that frames loss in the formof theft. We use Amazon Mechanical Turk to gather responses to our experiment online. We findthat our treatment has no statistical effect, that people do not act in a way that is inconsistent withtheir risk aversion simply because of the possibility of theft.

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