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Probability weighting under time pressure: applying the double-response method

Author

Listed:
  • Katarzyna Gawryluk

    (Centre for Economic Psychology and Decision Sciences Koźmiński University)

  • Michal Krawczyk

    (Faculty of Economic Sciences, University of Warsaw)

Abstract

We conduct a laboratory experiment to investigate the impact of deliberation time on behavior under risk and uncertainty. Towards this end we let our participant make quick, intuitive evaluations of a number of lotteries and modify them, should they wish to do so, after deliberation. Both certainty equivalents are incentivized (a double-response method). The main finding is that additional deliberation time reduces pessimism, especially in the case of lotteries involving unknown probabilities.

Suggested Citation

  • Katarzyna Gawryluk & Michal Krawczyk, 2017. "Probability weighting under time pressure: applying the double-response method," Working Papers 2017-08, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2017-08
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    File URL: https://www.wne.uw.edu.pl/index.php/download_file/3408/
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    References listed on IDEAS

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    1. Anjali D. Nursimulu & Peter Bossaerts, 2014. "Risk and Reward Preferences under Time Pressure," Review of Finance, European Finance Association, vol. 18(3), pages 999-1022.
    2. Krawczyk, Michał & Sylwestrzak, Marta, 2018. "Exploring the role of deliberation time in non-selfish behavior: The double response method," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 121-134.
    3. Jeffrey Butler & Luigi Guiso & Tullio Jappelli, 2014. "The role of intuition and reasoning in driving aversion to risk and ambiguity," Theory and Decision, Springer, vol. 77(4), pages 455-484, December.
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    Cited by:

    1. Martin G. Kocher & David Schindler & Stefan T. Trautmann & Yilong Xu, 2019. "Risk, time pressure, and selection effects," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 216-246, March.

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    More about this item

    Keywords

    probability weighting; prospect theory; time pressure;
    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

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