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The Role of Emotions on Risk Preferences: An Experimental Analysis

  • Anna Conte

    ()

    (Westminster Business School, University of Westminster, London, and Strategic Interaction Group, Max Planck Institute of Economics, Jena)

  • M. Vittoria Levati

    ()

    (Strategic Interaction Group, Max Planck Institute of Economics, Jena, and Department of Economics, University of Verona)

  • Chiara Nardi

    ()

    (Department of Economics, University of Verona)

In the last decades, there has been a large volume of research showing that emotions do have relevant effects on decision-making. We contribute to this literature by experimentally investigating the impact of four specific emotional states - joviality, sadness, fear, and anger - on risk attitudes. In order to do so, we fit two models of behaviour under risk: the Expected Utility model (EU) and the Rank Dependent Expected Utility model (RDEU), assuming several functional forms of the weighting function. Our results indicate that all emotional states instigate risk-seeking behaviour. Furthermore, we show that there are some differences across gender and across participants' experience in lab experiments.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2013-046.

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Date of creation: 29 Oct 2013
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Handle: RePEc:jrp:jrpwrp:2013-046
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  1. George Loewenstein, 2000. "Emotions in Economic Theory and Economic Behavior," American Economic Review, American Economic Association, vol. 90(2), pages 426-432, May.
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