This paper provides an experimental test of a joint hypothesis implied by the constant relative risk averse model of first price sealed bid auction theory and standard risk preference theory. This test will be used to determine whether observed risk attitude is solely a characteristic of the individual (as conventional economic theory has it) or jointly a characteristic of the individual and the environment (as some cognitive psychologists maintain). It also presents a simple adjustment to first price auction experiments which causes "throw away" bidding behavior to be dramatically decreased and makes empirical estimation more precise.

Original Draft
October 23, 1995

This Draft
January 12, 1998