Estimation of Utility Function Based on Questionnaire Survey

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Our project aims to estimate preference parameters. In the first year, we discussed the outline of the project, such as appropriate method for questionnaire surveys and economic experiments. Since 2002, we have built up a panel data based on questionnaire surveys. In 2003, we conducted experiments to estimate risk aversion and time preference at Osaka, Ritsumeikan and Waseda University, and at the same time conducted questionnaire surveys on the subjects. This enabled us to analyze the connection between their risk aversion and time preference, and their attributes, as well as to compare experiment and survey results. An experiment on students in the commerce department of Waseda University reveals that they are risk averse. In 2004, to find out if this risk averse attitude is due to their knowledge on finance theory, we conducted an additional experiment on students from other departments. This experiment was also held at Fudan University in Shanghai for cross national study and to check the importance of monetary incentive on an economic experiment. Loss-and-Gain experiments to check the Kahneman's theory of loss-aversion and framing effect were also held. We wrote papers based on these results. Regarding time preference experiments, we discovered hyperbolic discounting. As for risk aversion experiments, we indicated that people tend to be risk loving in low win probability in the lottery and become risk averse in higher probability. By combining the results of two experiments, we found a negative correlation between time discounting and risk aversion. In analysis of happiness, we found that the higher degree of time preference and risk aversion people have, the less happier they are. These research results are presented in conferences and on our website.