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Tempus Fugit: Time Pressure in Risky Decisions

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  • Kocher, Martin G.
  • Pahlke, Julius
  • Trautmann, Stefan T.

Abstract

We 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 Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 12221.

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Date of creation: Apr 2011
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Handle: RePEc:lmu:muenec:12221

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Keywords: time pressure; risky decisions; risk aversion; loss aversion; gain seeking; aspiration level;

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Citations

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Cited by:
  1. Lindner, Florian, 2014. "Decision time and steps of reasoning in a competitive market entry game," Economics Letters, Elsevier, Elsevier, vol. 122(1), pages 7-11.
  2. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11-20 money request game," Munich Reprints in Economics, University of Munich, Department of Economics 19234, University of Munich, Department of Economics.
  3. Ibanez, Marcela & Czermak, Simon & Sutter, Matthias, 2008. "Searching for a better deal - on the influence of group decision making, time pressure and gender in a search experiment," Working Papers in Economics 296, University of Gothenburg, Department of Economics.
  4. Buckert, Magdalena & Oechssler, Jörg & Schwieren, Christiane, 2014. "Imitation under stress," Working Papers 0556, University of Heidelberg, Department of Economics.

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