IDEAS home Printed from https://ideas.repec.org/a/eee/joepsy/v75y2019ipas0167487018302940.html
   My bibliography  Save this article

On the priming of risk preferences: The role of fear and general affect

Author

Listed:
  • Alempaki, Despoina
  • Starmer, Chris
  • Tufano, Fabio

Abstract

Priming is an established tool in psychology for investigating aspects of cognitive processes underlying decision making and is increasingly applied in economics. We report a systematic attempt to test the reproducibility and generalisability of priming effects on risk attitudes in a more diverse population than professionals and students, when priming using either a positive or a negative experience. We further test fear as the causal mechanism underlying countercyclical risk aversion. Across a series of experiments with a total sample of over 1900 participants, we are unable to find any systematic effect of priming on risk preferences. Moreover, our results challenge the role of fear as the mechanism underlying countercyclical risk aversion; we find evidence of an impact of general affect such that the better our participants feel, the more risk they take.

Suggested Citation

  • Alempaki, Despoina & Starmer, Chris & Tufano, Fabio, 2019. "On the priming of risk preferences: The role of fear and general affect," Journal of Economic Psychology, Elsevier, vol. 75(PA).
    • Handle: RePEc:eee:joepsy:v:75:y:2019:i:pa:s0167487018302940
    DOI: 10.1016/j.joep.2018.12.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167487018302940
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.joep.2018.12.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 399-425, September.
    2. David Hirshleifer & Tyler Shumway, 2003. "Good Day Sunshine: Stock Returns and the Weather," Journal of Finance, American Finance Association, vol. 58(3), pages 1009-1032, June.
    3. Michael S. Haigh & John A. List, 2005. "Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis," Journal of Finance, American Finance Association, vol. 60(1), pages 523-534, February.
    4. Antonio A. Arechar & Simon Gächter & Lucas Molleman, 2018. "Conducting interactive experiments online," Experimental Economics, Springer;Economic Science Association, vol. 21(1), pages 99-131, March.
    5. Gary E. Bolton & Axel Ockenfels & Ulrich W. Thonemann, 2012. "Managers and Students as Newsvendors," Management Science, INFORMS, vol. 58(12), pages 2225-2233, December.
    6. Mandel, Naomi, 2003. "Shifting Selves and Decision Making: The Effects of Self-Construal Priming on Consumer Risk-Taking," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(1), pages 30-40, June.
    7. Alain Cohn & Jan Engelmann & Ernst Fehr & Michel André Maréchal, 2015. "Evidence for Countercyclical Risk Aversion: An Experiment with Financial Professionals," American Economic Review, American Economic Association, vol. 105(2), pages 860-885, February.
    8. Jesse Chandler & Gabriele Paolacci & Eyal Peer & Pam Mueller & Kate A. Ratliff, 2015. "Using Nonnaive Participants Can Reduce Effect Sizes," Mathematica Policy Research Reports bffac982a56e4cfba3659e74a, Mathematica Policy Research.
    9. repec:cup:judgdm:v:5:y:2010:i:5:p:411-419 is not listed on IDEAS
    10. 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.
    11. Preece, Jessica & Stoddard, Olga, 2015. "Why women don’t run: Experimental evidence on gender differences in political competition aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 296-308.
    12. Mark J. Kamstra & Lisa A. Kramer & Maurice D. Levi, 2003. "Winter Blues: A SAD Stock Market Cycle," American Economic Review, American Economic Association, vol. 93(1), pages 324-343, March.
    13. Daniel J. Benjamin & James J. Choi & A. Joshua Strickland, 2010. "Social Identity and Preferences," American Economic Review, American Economic Association, vol. 100(4), pages 1913-1928, September.
    14. Jonathan E. Alevy & Michael S. Haigh & John A. List, 2007. "Information Cascades: Evidence from a Field Experiment with Financial Market Professionals," Journal of Finance, American Finance Association, vol. 62(1), pages 151-180, February.
    15. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 631-645.
    16. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2018. "Time varying risk aversion," Journal of Financial Economics, Elsevier, vol. 128(3), pages 403-421.
    17. Isen, Alice M. & Geva, Nehemia, 1987. "The influence of positive affect on acceptable level of risk: The person with a large canoe has a large worry," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(2), pages 145-154, April.
    18. König-Kersting, Christian & Trautmann, Stefan T., 2018. "Countercyclical risk aversion: Beyond financial professionals," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 94-101.
    19. Dalia Gilad & Doron Kliger, 2008. "Priming the Risk Attitudes of Professionals in Financial Decision Making," Review of Finance, European Finance Association, vol. 12(3), pages 567-586.
    20. Callen, Mike & Isaqzadeh, Mohammad & Long, James D. & Sprenger, Charles, 2014. "Violence and risk preference: experimental evidence from Afghanistan," LSE Research Online Documents on Economics 102932, London School of Economics and Political Science, LSE Library.
    21. Colin F. Camerer & Anna Dreber & Felix Holzmeister & Teck-Hua Ho & Jürgen Huber & Magnus Johannesson & Michael Kirchler & Gideon Nave & Brian A. Nosek & Thomas Pfeiffer & Adam Altmejd & Nick Buttrick , 2018. "Evaluating the replicability of social science experiments in Nature and Science between 2010 and 2015," Nature Human Behaviour, Nature, vol. 2(9), pages 637-644, September.
    22. Michael Callen & Mohammad Isaqzadeh & James D. Long & Charles Sprenger, 2014. "Violence and Risk Preference: Experimental Evidence from Afghanistan," American Economic Review, American Economic Association, vol. 104(1), pages 123-148, January.
    23. Silvio Aldrovandi & Petko Kusev & Tetiana Hill & Ivo Vlaev, 2017. "Context Moderates Priming Effects on Financial Risk Taking," Risks, MDPI, vol. 5(1), pages 1-11, March.
    24. Clifford, Scott & Jerit, Jennifer, 2014. "Is There a Cost to Convenience? An Experimental Comparison of Data Quality in Laboratory and Online Studies," Journal of Experimental Political Science, Cambridge University Press, vol. 1(2), pages 120-131, January.
    25. Alain Cohn & Michel André Maréchal, 2016. "Priming in economics," ECON - Working Papers 226, Department of Economics - University of Zurich.
    26. Ronald Bosman & Frans van Winden, 2002. "Emotional Hazard in a Power-to-take Experiment," Economic Journal, Royal Economic Society, vol. 112(476), pages 147-169, January.
    27. Helga Fehr & Thomas Epper & Adrian Bruhin & Renate Schubert, 2007. "Risk and Rationality: The Effect of Incidental Mood on Probability Weighting," SOI - Working Papers 0703, Socioeconomic Institute - University of Zurich.
    28. Berinsky, Adam J. & Huber, Gregory A. & Lenz, Gabriel S., 2012. "Evaluating Online Labor Markets for Experimental Research: Amazon.com's Mechanical Turk," Political Analysis, Cambridge University Press, vol. 20(3), pages 351-368, July.
    29. Rebecca W. Hamilton & Gabriel J. Biehal, 2005. "Achieving Your Goals or Protecting Their Future? The Effects of Self-View on Goals and Choices," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 32(2), pages 277-283, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sören Harrs & Lara Marie Müller & Bettina Rockenbach, 2021. "How Optimistic and Pessimistic Narratives about COVID-19 Impact Economic Behavior," ECONtribute Discussion Papers Series 091, University of Bonn and University of Cologne, Germany.
    2. Niculaescu, Corina E. & Sangiorgi, Ivan & Bell, Adrian R., 2023. "Does personal experience with COVID-19 impact investment decisions? Evidence from a survey of US retail investors," International Review of Financial Analysis, Elsevier, vol. 88(C).
    3. Vasudevan, Ellapulli V., 2023. "Some gains are riskier than others: Volatility changes and the disposition effect," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 68-81.
    4. Nikhil Masters & Tim Lloyd & Chris Starmer, 2022. "Do emotional carryover effects carry over?," Discussion Papers 2022-16, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    5. Huber, Christoph & Huber, Jürgen & Kirchler, Michael, 2021. "Market shocks and professionals’ investment behavior – Evidence from the COVID-19 crash," Journal of Banking & Finance, Elsevier, vol. 133(C).
    6. Tee, Chwee-Ming & Wong, Wai-Yan & Hooy, Chee-Wooi, 2022. "Government power and the value of political connections: Evidence from Covid-19 economic lockdowns," Finance Research Letters, Elsevier, vol. 47(PB).
    7. Bottasso, Anna & Duchêne, Sébastien & Guerci, Eric & Hanaki, Nobuyuki & Noussair, Charles N., 2022. "Higher order risk attitudes of financial experts," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    8. Rahmani, Djamel & Loureiro, Maria & Escobar, Cristina & Gil, José M., 2021. "How Emotions Affect Choices: The Case of Wine," 2021 Conference, August 17-31, 2021, Virtual 314943, International Association of Agricultural Economists.
    9. Irene Maria Buso & Daniela Di Cagno & Vittorio Larocca & Lorenzo Spadoni, 2022. "Gli effetti della modalita' di comunicazione del rischio sulle scelte di investimento finanziario: i risultati di un esperimento (Risk communication and investment decisions: An experimental analysis)," Moneta e Credito, Economia civile, vol. 75(297), pages 61-75.
    10. Cordes, Henning & Nolte, Sven & Schneider, Judith C., 2023. "Dynamics of stock market developments, financial behavior, and emotions," Journal of Banking & Finance, Elsevier, vol. 154(C).
    11. Andersson, Lina, 2022. "Fear and Economic Behavior," Working Papers in Economics 819, University of Gothenburg, Department of Economics.
    12. Weber, Martin & Kieren, Pascal & Mueller-Dethard, Jan, 2020. "Why so Negative? Belief Formation and Risk Taking in Boom and Bust Markets," CEPR Discussion Papers 14647, C.E.P.R. Discussion Papers.
    13. Huong Trang Kim, 2023. "Linking Trait Affectivity, Cognitive Ability, and Preferences Among Top Managers: Insights From a Lab-In-The-Field Experiment," Evaluation Review, , vol. 47(3), pages 479-503, June.
    14. Pascal Kieren & Jan Müller-Dethard & Martin Weber, 2023. "Risk-Taking and Asymmetric Learning in Boom and Bust Markets," Review of Finance, European Finance Association, vol. 27(5), pages 1743-1779.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. König-Kersting, Christian & Trautmann, Stefan T., 2018. "Countercyclical risk aversion: Beyond financial professionals," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 94-101.
    2. Theresa Treffers & Philipp D. Koellinger & Arnold Picot, 2016. "Do Affective States Influence Risk Preferences?," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(3), pages 309-335, December.
    3. Alain Cohn & Ernst Fehr & Michel André Maréchal, 2017. "Do Professional Norms in the Banking Industry Favor Risk-taking?," The Review of Financial Studies, Society for Financial Studies, vol. 30(11), pages 3801-3823.
    4. Alsheikh, Muna Ibrahim, 2020. "Beliefs-dependent utilities do influence firm-specific wealth (executives’ inside equity holdings)," Journal of Economics and Business, Elsevier, vol. 109(C).
    5. Dalton, Patricio S. & Nhung, Nguyen & Rüschenpöhler, Julius, 2020. "Worries of the poor: The impact of financial burden on the risk attitudes of micro-entrepreneurs," Journal of Economic Psychology, Elsevier, vol. 79(C).
    6. Jetter, Michael & Magnusson, Leandro M. & Roth, Sebastian, 2020. "Becoming sensitive: Males’ risk and time preferences after the 2008 financial crisis," European Economic Review, Elsevier, vol. 128(C).
    7. Bottasso, Anna & Duchêne, Sébastien & Guerci, Eric & Hanaki, Nobuyuki & Noussair, Charles N., 2022. "Higher order risk attitudes of financial experts," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    8. Black, Nicole & Johnston, David W. & Suziedelyte, Agne, 2017. "Justification bias in self-reported disability: New evidence from panel data," Journal of Health Economics, Elsevier, vol. 54(C), pages 124-134.
    9. Meier, Armando N. & Schmid, Lukas & Stutzer, Alois, 2019. "Rain, emotions and voting for the status quo," European Economic Review, Elsevier, vol. 119(C), pages 434-451.
    10. Weber, Martin & Kieren, Pascal & Mueller-Dethard, Jan, 2020. "Why so Negative? Belief Formation and Risk Taking in Boom and Bust Markets," CEPR Discussion Papers 14647, C.E.P.R. Discussion Papers.
    11. Treffers, T. & Koellinger, Ph.D. & Picot, A.O., 2012. "In the Mood for Risk? A Random-Assignment Experiment Addressing the Effects of Moods on Risk Preferences," ERIM Report Series Research in Management ERS-2012-014-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    12. Pruijssers, Jorien Louise & Singer, Gallia & Singer, Zvi & Tsang, Desmond, 2023. "Social influence pressures and the risk preferences of aspiring financial market professionals," Journal of Accounting Education, Elsevier, vol. 62(C).
    13. Martin Holmén & Felix Holzmeister & Michael Kirchler & Matthias Stefan & Erik Wengström, 2023. "Economic Preferences and Personality Traits Among Finance Professionals and the General Population," The Economic Journal, Royal Economic Society, vol. 133(656), pages 2949-2977.
    14. Silvio Aldrovandi & Petko Kusev & Tetiana Hill & Ivo Vlaev, 2017. "Context Moderates Priming Effects on Financial Risk Taking," Risks, MDPI, vol. 5(1), pages 1-11, March.
    15. Nana Adrian & Ann-Kathrin Crede & Jonas Gehrlein, 2019. "Market Interaction and the Focus on Consequences in Moral Decision Making," Diskussionsschriften dp1905, Universitaet Bern, Departement Volkswirtschaft.
    16. Vesa Pursiainen, 2022. "Cultural Biases in Equity Analysis," Journal of Finance, American Finance Association, vol. 77(1), pages 163-211, February.
    17. Christoph Huber & Christian König-Kersting, 2022. "Experimenting with Financial Professionals," Working Papers 2022-07, Faculty of Economics and Statistics, Universität Innsbruck.
    18. Huber, Christoph & Huber, Jürgen & Kirchler, Michael, 2021. "Market shocks and professionals’ investment behavior – Evidence from the COVID-19 crash," Journal of Banking & Finance, Elsevier, vol. 133(C).
    19. Engler, Daniel & Groh, Elke D. & Ziegler, Andreas, 2019. "The causal effect of religious and environmental identity on green preferences: A combined priming and stated choice experiment," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203610, Verein für Socialpolitik / German Economic Association.
    20. Ute Rink & Theresa Rollwage, 2022. "Household disability and time preferences: Evidence from incentivized experiments in Vietnam," TVSEP Working Papers wp-027, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.

    More about this item

    Keywords

    Priming; Risk preferences; Replication; Emotions; Experiment;
    All these keywords.

    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
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:75:y:2019:i:pa:s0167487018302940. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/joep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.