Mudzingiri, CalvinKoumba, Ur2021-07-282021-07-282021Mudzingiri, C., & Koumba, U. (2021). Eliciting risk preferences experimentally versus using a general risk question. Does financial literacy bridge the gap? Risks, 9: 140. https://doi.org/10.3390/risks90801402227-9091 (online)http://hdl.handle.net/11660/11234The study investigates the stability of financial risk preference choices elicited from subjects by way of two methods, namely: experimentally elicited incentivized revealed risk preferences (IRRP) and (self-reported) perceived willingness to take a financial risk (PWTFR). The research further examines whether financial literacy (a human capital aspect) helps in reducing the gap between IRRP and PWTFR choices made by subjects. A total of 193 university students (where 53% were female) participated in the study. The subjects completed IRRP choices from four multiple price list (MPL) risk preference tasks and a financial literacy questionnaire. There is a tendency to anchor at extremes of risk-seeking behavior when subjects self-report their PWTFR choices. A paired t-test analysis of the two methods shows that the average responses from the two methods are significantly different. A random effect (RE) panel regression shows that an increase in financial literacy narrows the gap between IRRP and PWTFR choices. The study’s findings show that responses by subjects from a PWTFR general risk question (GRQ) and IRRP experiment are unstable and inconsistent. What people say in a survey does not always translate into what they do when faced with a risk preference choice dilemma. Financial literacy helps individuals to predict their risk attitudes more precisely.enIncentivized revealed risk preferencesPerceived financial riskGeneral risk questionRisk tolerance gapFinancial literacyTheory comparison approachArticleAuthor(s)