IMPLEMENTERING VAN DIE INTERVALBENADERING BY DIE BEPALING VAN BESLUITNEMERS SE HOUDING TEENOOR RISIKO / Implementing the interval approach in measuring the risk attitude of decision makers

Abstract

In this article the interval approach to measuring risk attitudes is discussed. The concept of generalised stochastic dominance (stochastic dominance with respect to a function) is used in the interval approach developed by King to elicit the risk attitudes of farmers at five different after tax net income levels. The risk attitude of 52 farmers in the Western and Southern Cape were elicited at two different points in time. Risk averse, risk seeking and risk indifferent attitudes were observed. The degree of intertemporal stability in risk attitudes varied between the specified income levels. There seems to be a negative relationship between the accuracy of the risk interval on the one hand and the consistency of choice on the other hand. The response to two control questions indicated a varying degree of consistency at each income level.

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