Question

Create two directionalhypotheses in an area in which you might be interested in doing research.

Answer 1

The concept of risk preference has often been viewed as one of the key building blocks of economic theory and of human behaviour more generally. The main idea is that people differ in their willingness with which they prefer a more risky option versus a less risky option. For example, some people might be willing to invest their money in the stock market, which has the potential of larger wins but also large losses, whereas other people prefer putting their money in a savings account with low returns, but also lower risk that money will be lost. The present data set, experience_gambles.csv, contains data from an experiment investigating whether an individual’s risk preference is dependent on their recent experiences.

Particularly, the research question is whether a series of positive or negative experiences affects the expressed risk preference.

Ho: experience has no effect on risk preference

H1: experience affects risk preference