On correlated lotteries in economic applications

Markus Dertwinkel-Kalt; Sebastian Ebert; Mats Köster

doi:10.1016/j.jebo.2023.08.025

On correlated lotteries in economic applications

Markus Dertwinkel-Kalt^*, Sebastian Ebert, Mats Köster

^*Corresponding author for this work

Department of Economics

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

Abstract (may include machine translation)

Economic models and experiments frequently use lotteries with only a few outcomes. We study the correlation of such lotteries and discuss its relevance for economic applications. In particular, we fully characterize the joint distribution of two binary lotteries via their first three univariate moments and their correlation coefficient. As we illustrate alongside several examples, the resulting parametrization may be useful for economic modeling and experimental design.

Original language	English
Pages (from-to)	292-306
Number of pages	15
Journal	Journal of Economic Behavior and Organization
Volume	215
DOIs	https://doi.org/10.1016/j.jebo.2023.08.025
State	Published - 1 Nov 2023

Keywords

Attention
Binary lotteries
Correlation
Correlation neglect
Portfolio choice

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10.1016/j.jebo.2023.08.025License: CC BY-NC-ND

Cite this

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title = "On correlated lotteries in economic applications",

abstract = "Economic models and experiments frequently use lotteries with only a few outcomes. We study the correlation of such lotteries and discuss its relevance for economic applications. In particular, we fully characterize the joint distribution of two binary lotteries via their first three univariate moments and their correlation coefficient. As we illustrate alongside several examples, the resulting parametrization may be useful for economic modeling and experimental design.",

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AU - Köster, Mats

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AB - Economic models and experiments frequently use lotteries with only a few outcomes. We study the correlation of such lotteries and discuss its relevance for economic applications. In particular, we fully characterize the joint distribution of two binary lotteries via their first three univariate moments and their correlation coefficient. As we illustrate alongside several examples, the resulting parametrization may be useful for economic modeling and experimental design.

KW - Attention

KW - Binary lotteries

KW - Correlation

KW - Correlation neglect

KW - Portfolio choice

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VL - 215

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JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

ER -

On correlated lotteries in economic applications

Abstract (may include machine translation)

Keywords

Access to Document

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