Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences

Using new methods, we measure the intensities of higher-order risk preferences (prudence and temperance) in an incentivized experiment with 658 adolescents. Aligned with theory, we find that higher-order risk preferences are strongly related to field behavior, including prevention, health, addictive behavior, and financial decision-making. Most importantly, we show that ignoring prudence and temperance can yield misleading conclusions about the relation of risk preferences to field behavior, and