The Role of Emotions on Risk Preferences: An Experimental Analysis
AbstractIn the last decades, there has been a large volume of research showing that emotions do have relevant effects on decision-making. We contribute to this literature by experimentally investigating the impact of four specific emotional states - joviality, sadness, fear, and anger - on risk attitudes. In order to do so, we fit two models of behaviour under risk: the Expected Utility model (EU) and the Rank Dependent Expected Utility model (RDEU), assuming several functional forms of the weighting function. Our results indicate that all emotional states instigate risk-seeking behaviour. Furthermore, we show that there are some differences across gender and across participants' experience in lab experiments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2013-046.
Date of creation: 29 Oct 2013
Date of revision:
Risk aversion; Emotions; Structural models;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D00 - Microeconomics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
- NEP-CBE-2013-11-16 (Cognitive & Behavioural Economics)
- NEP-EXP-2013-11-16 (Experimental Economics)
- NEP-NEU-2013-11-16 (Neuroeconomics)
- NEP-UPT-2013-11-16 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steffen Andersen & Glenn Harrison & Morten Lau & E. RutstrÃ¶m, 2006.
"Elicitation using multiple price list formats,"
Springer, vol. 9(4), pages 383-405, December.
- Drichoutis, Andreas & Nayga, Rodolfo, 2010.
"Eliciting risk and time preferences under induced mood states,"
33013, University Library of Munich, Germany, revised 27 Aug 2011.
- Drichoutis, Andreas C. & Nayga, Rodolfo M., 2013. "Eliciting risk and time preferences under induced mood states," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 18-27.
- Drichoutis, Andreas & Nayga, Rodolfo, 2010. "Eliciting risk and time preferences under induced mood states," MPRA Paper 25731, University Library of Munich, Germany.
- Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
- Train,Kenneth E., 2009.
"Discrete Choice Methods with Simulation,"
Cambridge University Press, number 9780521766555, October.
- John Hey, 2001.
"Does Repetition Improve Consistency?,"
Springer, vol. 4(1), pages 5-54, June.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- George Loewenstein, 2000. "Emotions in Economic Theory and Economic Behavior," American Economic Review, American Economic Association, vol. 90(2), pages 426-432, May.
- Kliger, Doron & Levy, Ori, 2003. "Mood-induced variation in risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 573-584, December.
- Diecidue, Enrico & Wakker, Peter P, 2001.
" On the Intuition of Rank-Dependent Utility,"
Journal of Risk and Uncertainty,
Springer, vol. 23(3), pages 281-98, November.
- Tim Friehe & Hannah Schildberg-Hörisch, 2014.
"Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences,"
CESifo Working Paper Series
4747, CESifo Group Munich.
- Friehe, Tim & Schildberg-Hörisch, Hannah, 2014. "Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences," IZA Discussion Papers 8109, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Pasche).
If references are entirely missing, you can add them using this form.