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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, Max-Planck-Institute of Economics 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. John Hey, 2001. "Does Repetition Improve Consistency?," Experimental Economics, Springer, vol. 4(1), pages 5-54, June.
  2. Frans Van Winden & Michal Krawczyk & Astrid Hopfensitz, 2010. "Investment, Resolution of Risk, and the Role of Affect," CESifo Working Paper Series 2975, CESifo Group Munich.
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  9. Jamison, Julian & Karlan, Dean & Schechter, Laura, 2008. "To deceive or not to deceive: The effect of deception on behavior in future laboratory experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 68(3-4), pages 477-488, December.
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  19. Charness, Gary & Gneezy, Uri & Imas, Alex, 2013. "Experimental methods: Eliciting risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 43-51.
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