Income and choice under risk

This paper studies the relationship between income and risky choice in a field experiment where stakes are of first-order importance to the subjects' living standards. We combine observations of stopping decisions in a Norwegian game show with reliable data on each subject's income. Participants in the experiment are randomly drawn from an unusually large subject pool. Our results clearly indicate that people are risk-averse when making choices with large stakes, and that decision makers with high income are more willing to accept financial risk.