Tempus Fugit: Time Pressure in Risky Decisions
AbstractWe study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In an experiment we find that risk aversion for gains is robust under time pressure whereas risk seeking for losses turns into risk aversion under time pressure. For mixed prospects, subjects become more loss averse and more gain seeking under time pressure, depending on the framing of the prospects. The results suggest the importance of aspiration levels under time pressure. We discuss the implications of our findings for decision making situations that involve time pressure.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 12221.
Date of creation: Apr 2011
Date of revision:
time pressure; risky decisions; risk aversion; loss aversion; gain seeking; aspiration level;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CBE-2011-04-30 (Cognitive & Behavioural Economics)
- NEP-EXP-2011-04-30 (Experimental Economics)
- NEP-UPT-2011-04-30 (Utility Models & Prospect Theory)
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