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Abstract

This study examines differences in individual decision making between children and adults using a paired lottery choice experiment. A lottery choice experiment involves selecting between two options, one with a small difference in payoffs and one with a large difference in payoffs, for each of ten decisions with increasing probability of obtaining the higher payoff. Based on subject decisions, risk preferences can be inferred. Particular attention is given to age and gender differences. The main result reveals that children choose significantly fewer “safe” lotteries than adults on average. Specifically, children act as risk-seeking in low winning percentage lotteries. There is no significant difference in safe choices between genders in both samples. These findings can prove to be an important asset when developing policies to curb hazardous behavior in children.

Keywords

Lottery choice experiment Risk preferences Experimental economics Individual decision making Children's decision making

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Variations in Individual Decision Making: Children,Adults,and Economic Theory

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