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The Role of Emotions on Risk Preferences: An Experimental Analysis

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Anna Conte & M. Vittoria Levati & Chiara Nardi, 2013. "The Role of Emotions on Risk Preferences: An Experimental Analysis," Jena Economic Research Papers 2013-046, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2013-046
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    References listed on IDEAS

    as
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    1. Our feeble intelligence
      by chris in Stumbling and Mumbling on 2018-10-25 13:55:24

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    Cited by:

    1. Lepori, Gabriele M., 2015. "Investor mood and demand for stocks: Evidence from popular TV series finales," Journal of Economic Psychology, Elsevier, vol. 48(C), pages 33-47.
    2. repec:eee:jeborg:v:150:y:2018:i:c:p:182-201 is not listed on IDEAS
    3. Lopera, Maria Adelaida & Marchand, Steeve, 2018. "Peer effects and risk-taking among entrepreneurs: Lab-in-the-field evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 182-201.
    4. Filippin, Antonio & Gioia, Francesca, 2017. "Competition and Subsequent Risk-Taking Behaviour: Heterogeneity across Gender and Outcomes," IZA Discussion Papers 10792, Institute for the Study of Labor (IZA).
    5. Tim Friehe & Hannah Schildberg-Hörisch, 2014. "Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences," CESifo Working Paper Series 4747, CESifo Group Munich.
    6. repec:eee:eecrev:v:100:y:2017:i:c:p:463-487 is not listed on IDEAS
    7. Gerhardt, Holger & Schildberg-Hörisch, Hannah & Willrodt, Jana, 2017. "Does self-control depletion affect risk attitudes?," European Economic Review, Elsevier, vol. 100(C), pages 463-487.
    8. Chie Hanaoka & Hitoshi Shigeoka & Yasutora Watanabe, 2015. "Do Risk Preferences Change? Evidence from Panel Data before and after the Great East Japan Earthquake," NBER Working Papers 21400, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Risk aversion; Emotions; Structural models;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D00 - Microeconomics - - General - - - General

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