Bridging the Gap - A Model Comparison in Risk Behavior

Bridging the Gap - A Model Comparison in Risk Behavior | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Bridging the Gap - A Model Comparison in Risk Behavior Martin Höppner This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7480878/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper explores the challenges of measuring risk preferences and examines the disparity within behavioral measures. We conducted an online experiment where participants repeatedly chose between a risky and a safe stock in presence of multiple reference points and a deadline. We find evidence that convergence of behavioral risk preference measures depends on contextual similarity. Additionally, we show that risk preferences (measured by variance) near a reference point are variable in the short run. Nonetheless, Mean-Variance models outperform standard Expected Utility Theory models, and Behavioral models combining both excel. Our results indicate a shift in individual's decision making process, investing more resources (i.e. time) for the final decision before the deadline. The results emphasize the importance of context in risk preference measures and the limitations of a constant variance preference assumptions for modeling. We suggest moving beyond equating risk preference with variance preference for a better alignment with Expected Utility Theory, facilitating clearer communication of risk across fields and stakeholders. JEL Classification: D81, C91, G11 Behavioral Economics Decision Sciences Risk preferences reference points proxy goals experiment Full Text Additional Declarations The authors declare no competing interests. Written informed consent was obtained from all participants prior to participation. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7480878","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":506954944,"identity":"385bc7d0-6a5d-4c65-b80b-85a735e00391","order_by":0,"name":"Martin Höppner","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA80lEQVRIiWNgGAWjYLCCBDCCADkDMMWGVwNjA7IWYwMGZiK0MCBpSdxASItu+9nnDx7uYMjjZ+899rig4l76dgb+YxIMZTY4tZidSTdsSDzDUCzZcy7deMaZ4tydDcxsEgzn0nBrOZDG2JDYBnTPjRwzad62hNwN9x+zSTC2Hcat5fwzqJb7b4Ba/iWkGxxgBmn5j1vLDbgtPEAtDQkJUC0H8Gh5xjgjsU0icWZPXroxz7EEQ6BfjC0SziXjcVgaw8efbTaJ/exnjz3mqUmQN2dgfHjjQ5kdTi1QIAHEPEhxkUBIAwTw4I/xUTAKRsEoGLkAALSBUTlo2Z2sAAAAAElFTkSuQmCC","orcid":"https://orcid.org/0009-0006-7904-295X","institution":"BTU Cottbus-Senftenberg","correspondingAuthor":true,"prefix":"","firstName":"Martin","middleName":"","lastName":"Höppner","suffix":""}],"badges":[],"createdAt":"2025-08-28 13:40:41","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-7480878/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7480878/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":90198882,"identity":"6a87b06e-f266-4cc5-b8ee-b8bf86cda1a3","added_by":"auto","created_at":"2025-08-29 18:00:59","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1400667,"visible":true,"origin":"","legend":"","description":"","filename":"Bridgingthegapamodelcomparisoninriskbehavior.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7480878/v1_covered_a7d7a4d4-ccf7-4683-90a6-29b1862a2a19.pdf"}],"financialInterests":"\u003cp\u003eThe authors declare no competing interests.\u003c/p\u003e\n\u003cp\u003eWritten informed consent was obtained from all participants prior to participation.\u003c/p\u003e","formattedTitle":"\u003cp\u003eBridging the Gap - A Model Comparison in Risk Behavior\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"BTU Cottbus-Senftenberg","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Risk preferences, reference points, proxy goals, experiment","lastPublishedDoi":"10.21203/rs.3.rs-7480878/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7480878/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper explores the challenges of measuring risk preferences and examines the disparity within behavioral measures. 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