DP8868 Salience, Risky Choices and Gender

Author(s): Alison L Booth, Patrick Nolen
Publication Date: February 2012
Keyword(s): cognitive ability, gender, probability weights, risk-aversion
JEL(s): D8, D81, J16
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8868

Risk theories typically assume individuals make risky choices using probability weights that differ from objective probabilities. Recent theories suggest that probability weights vary depending on which portion of a risky environment is made salient. Using experimental data we show that salience affects young men and women differently, even after controlling for cognitive and non-cognitive skills. Men are significantly more likely than women to switch from a certain to a risky choice once the upside of winning is made salient, even though the expected value of the choice remains the same.