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The role of emotions on risk aversion: A Prospect Theory experiment

Listed author(s):
  • Campos-Vazquez, Raymundo M.
  • Cuilty, Emilio

This study measures risk and loss aversion using Prospect Theory and examines the impact of emotions on these parameters. Students’ emotions were manipulated using information on rising deaths due to drug violence in Mexico and youth unemployment and Tanaka et al. (2010) methodology was employed to elicit PT parameters. We find that risk aversion increases with sadness while loss aversion is negatively influenced by anger. On average, anger reduces loss aversion by half.

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File URL: http://www.sciencedirect.com/science/article/pii/S2214804314000196
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Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 50 (2014)
Issue (Month): C ()
Pages: 1-9

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Handle: RePEc:eee:soceco:v:50:y:2014:i:c:p:1-9
DOI: 10.1016/j.socec.2014.01.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620175

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