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Can Personality Type Explain Heterogeneity in Probability Distortions?

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  • C. Monica Capra
  • Bing Jiang
  • Jan Engelmann
  • Gregory Berns

Abstract

There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities non-linearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how people distort probabilities. Despite this, little effort has been made to identify the source of heterogeneity. In this paper, we explore the possibility that the probability distortions are linked to the personality profile of the decision-maker. Using four widely utilized personality tests, we classify participants into three distinct personality types and find that these types have different risk characteristics. Particularly, the trait of motivation plays a role in explaining the attraction of gambling, while the trait of impulsiveness affects the discriminability of non-extreme probabilities. Our results suggest heterogeneity in probability distortions may be explained by personality profiles, which can be elicited though standard questionnaires.

Suggested Citation

  • C. Monica Capra & Bing Jiang & Jan Engelmann & Gregory Berns, 2012. "Can Personality Type Explain Heterogeneity in Probability Distortions?," Emory Economics 1205, Department of Economics, Emory University (Atlanta).
  • Handle: RePEc:emo:wp2003:1205
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    Cited by:

    1. Jana Cahlíková & Lubomír Cingl, 2017. "Risk preferences under acute stress," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 209-236, March.
    2. Alessandro Gandolfo & Valeria De Bonis, 2014. "Motivations for gambling and the choice between skill and luck gambling products: an exploratory study," Discussion Papers 2014/185, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Valeria De Bonis & Alessandro Gandolfo, 2015. "Predictors of gambling among university students: the role of gender, sociality and attitudes towards risk," Public Finance Research Papers 11, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.

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