Beyond Risk Aversion - eliciting higher order risk preferences

Eliciting higher order risk preferences such as prudence, temperance and edginess is most commonly done with the use of compound lotteries. This thesis builds on the current research done in eliciting the same preferences with the use of reduced form lotteries. It introduces a modied version of a reduced form in the form of a dot plot, which captures more characteristics of the underlying distribution than existing versions of other researchers. Direct comparison between both versions is made and results show that violations of reduction axiom are present, thus the usage of reduced lotteries is suggested when eliciting higher order risk preferences.