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The Role of Emotions on Risk Preferences: An Experimental Analysis

Author

Listed:
  • Anna Conte

    (Westminster Business School, University of Westminster, London, and Strategic Interaction Group, Max Planck Institute of Economics, Jena)

  • M. Vittoria Levati

    (Strategic Interaction Group, Max Planck Institute of Economics, Jena, and Department of Economics, University of Verona)

  • Chiara Nardi

    (Department of Economics, University of Verona)

Abstract

In 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.

Suggested Citation

  • Anna Conte & M. Vittoria Levati & Chiara Nardi, 2013. "The Role of Emotions on Risk Preferences: An Experimental Analysis," Jena Economics Research Papers 2013-046, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2013-046
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Our feeble intelligence
      by chris in Stumbling and Mumbling on 2018-10-25 13:55:24
    2. When clever people do stupid things
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    9. Colasante, Annarita & Marini, Matteo M. & Russo, Alberto, 2017. "Incidental emotions and risk-taking: An experimental analysis," MPRA Paper 76992, University Library of Munich, Germany.
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    More about this item

    Keywords

    Risk aversion; Emotions; Structural models;
    All these keywords.

    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

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