Visual formats in risk preference elicitation: What catches the eye?

Abstract

We explore the effect of lottery presentation formats on elicitation of risk preferences using a popular probability varying task (Holt & Laury. The American Economic Review92 (5), 1644–1655. 2002) and a payoff-varying task (Drichoutis & Lusk. Journal of Risk and Uncertainty53 (2), 89–106. 2016). The presentation formats use horizontal bars that vary either the width or height of the bars (or both at the same time) to help subjects in judging how large or small probabilities and monetary amounts are in a given choice set. These graphical formats are compared to a text only format. We complement our choice data with eye tracking data that enriches our structural models with additional information regarding how visual attention varies with the presented information. While we find no statistically significant effects of presentation formats on elicited parameters for risk preferences, we find that eye tracking information not only is associated with preference parameters, but it also changes the inferences with respect to which decision theory better fits the choice data.