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Incidental emotions and risk-taking: An experimental analysis

Author

Listed:
  • Annarita Colasante

    () (LEE & Economics Department, Universitat Jaume I, Castellón-Spain)

  • Matteo M. Marini

    () (LEE & Economics Department, Universitat Jaume I, Castellón-Spain; Università degli Studi dell’Insubria, Italy)

  • Alberto Russo

    () (Department of Management, Università Politecnica delle Marche, Italy)

Abstract

In this paper we conduct a laboratory experiment in order to investigate the effect of incidental sadness and happiness on risky decision making. An emotion induction procedure is the treatment variable of a between-subjects design where two sessions aim at eliciting either sadness or happiness, respectively. Two further groups are characterized by neutral conditions and serve as baseline. After a manipulation check verifies the validity of the induction procedure, we use a multiple price list à la Holt and Laury (2002) to elicit individual risk preferences in the context of a lottery-choice task. The analysis reveals that both sadness and happiness promote greater risk aversion with respect to neutral conditions, a result which might be moderated by the risk elicitation task. Therefore, as compelling explanation we propose the theory of ego depletion, whereby regulating emotions so as to subsequently process information consumes a limited self-control resource, which is needed to take risks as well.

Suggested Citation

  • Annarita Colasante & Matteo M. Marini & Alberto Russo, 2018. "Incidental emotions and risk-taking: An experimental analysis," Working Papers 2018/13, Economics Department, Universitat Jaume I, Castellón (Spain).
  • Handle: RePEc:jau:wpaper:2018/13
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    Keywords

    laboratory experiment; emotions; preference elicitation; risk aversion; ego depletion;

    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

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