The Separate Effects of Self-Estimated and Actual Alcohol Intoxication on Risk Taking: A Field Experiment

Many risky actions are carried out under the influence of alcohol. However, the effect of alcoholic intoxication over the willingness to take risks is complex and still remains unclear. We conduct an economic field experiment in a natural, drinking, and risk-taking environment to analyze how both actual and self-estimated blood alcohol concentration (BAC) levels influence subjects' choices over monetary lotteries with constant expected value. Our results reveal a negative impact of both actual and self-estimated BAC levels on risk taking. However, for male and young subjects, we find a positive relationship between BAC underestimation (a pattern of estimation error that mainly occurs at high BAC levels) and the willingness to choose riskier lotteries. Our findings suggest that a risk compensation mechanism is activated only when individuals' own intoxication level is consciously self-perceived to be high but not underestimated. We conclude therefore that human propensity to engage in risky activities under the influence of alcohol is not due to an enhanced preference for risky choices. In addition to the suggestion in the existing literature that such propensity is due to a weakened ability to perceive risks, our results indicate that an impaired self-perception of own intoxication level may also be an important factor.