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Tempus Fugit: Time Pressure in Risky Decisions

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  • Kocher, Martin G.
  • Pahlke, Julius
  • Trautmann, Stefan T.

Abstract

We study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In an experiment we find that risk aversion for gains is robust under time pressure whereas risk seeking for losses turns into risk aversion under time pressure. For mixed prospects, subjects become more loss averse and more gain seeking under time pressure, depending on the framing of the prospects. The results suggest the importance of aspiration levels under time pressure. We discuss the implications of our findings for decision making situations that involve time pressure.

Suggested Citation

  • Kocher, Martin G. & Pahlke, Julius & Trautmann, Stefan T., 2011. "Tempus Fugit: Time Pressure in Risky Decisions," Discussion Papers in Economics 12221, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:12221
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    Cited by:

    1. Recalde M.P. & Riedl A.M. & Vesterlund L., 2014. "Error prone inference from respons time: The case of intuitive generosity," Research Memorandum 034, Maastricht University, Graduate School of Business and Economics (GSBE).
    2. Buckert, Magdalena & Oechssler, Jörg & Schwieren, Christiane, 2017. "Imitation under stress," Journal of Economic Behavior & Organization, Elsevier, vol. 139(C), pages 252-266.
    3. Anna Conte & Marco Scarsini & Oktay Sürücü, 2016. "The impact of time limitation: Insights from a queueing experiment," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(3), pages 260-274, May.
    4. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    5. repec:eee:joepsy:v:60:y:2017:i:c:p:53-70 is not listed on IDEAS
    6. De Paola, Maria & Gioia, Francesca, 2016. "Who performs better under time pressure? Results from a field experiment," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 37-53.
    7. Lindner, Florian, 2014. "Decision time and steps of reasoning in a competitive market entry game," Economics Letters, Elsevier, vol. 122(1), pages 7-11.
    8. Kocher, Martin & Schindler, David & Trautmann, Stefan & Xu, Yilong, 2018. "Risk, Time Pressure, and Selection Effects," Rationality and Competition Discussion Paper Series 84, CRC TRR 190 Rationality and Competition.
    9. Enrico Diecidue & Moshe Levy & Jeroen Ven, 2015. "No aspiration to win? An experimental test of the aspiration level model," Journal of Risk and Uncertainty, Springer, vol. 51(3), pages 245-266, December.
    10. Navarro-Martinez, Daniel & Loomes, Graham & Isoni, Andrea & Butler, David & Alaoui, Larbi, 2017. "Boundedly Rational Expected Utility Theory," MPRA Paper 79893, University Library of Munich, Germany.
    11. Emin Karagözoglu & Martin G. Kocher, 2015. "Bargaining under Time Pressure," CESifo Working Paper Series 5685, CESifo Group Munich.
    12. Katarzyna Gawryluk & Michal Krawczyk, 2017. "Probability weighting under time pressure: applying the double-response method," Working Papers 2017-08, Faculty of Economic Sciences, University of Warsaw.
    13. repec:eee:jeborg:v:146:y:2018:i:c:p:31-42 is not listed on IDEAS
    14. Maria P. Recalde & Arno Riedl & Lise Vesterlund, 2014. "Error Prone Inference from Response Time: The Case of Intuitive Generosity in Public Good Times," CESifo Working Paper Series 4987, CESifo Group Munich.
    15. Jan Hausfeld & Sven Resnjanskij, 2017. "Risky Decisions and the Opportunity Costs of Time," TWI Research Paper Series 108, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    16. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11–20 money request game," Economics Letters, Elsevier, vol. 120(3), pages 542-545.
    17. Conte, Anna & Scarsini, Marco & Sürücü, Oktay, 2015. "Does time pressure impair performance? An experiment on queueing behavior," Center for Mathematical Economics Working Papers 538, Center for Mathematical Economics, Bielefeld University.
    18. Kai A. Konrad & Tim Lohse & Sven A. Simon, 2017. "Deception Under Time Pressure: Conscious Decision or a Problem of Awareness?," CESifo Working Paper Series 6671, CESifo Group Munich.
    19. Lindner, Florian & Rose, Julia, 2017. "No need for more time: Intertemporal allocation decisions under time pressure," Journal of Economic Psychology, Elsevier, vol. 60(C), pages 53-70.
    20. Marcela Ibanez & Simon Czermak & Matthias Sutter, "undated". "Searching for a better deal ? On the influence of group decision making, time pressure and gender in a search experiment," Working Papers 2008-05, Faculty of Economics and Statistics, University of Innsbruck.
    21. Zhixin Xie & Lionel Page & Ben Hardy, 2016. "Investigating gender differences under time pressure in financial risk taking," QuBE Working Papers 045, QUT Business School.
    22. repec:kap:jrisku:v:54:y:2017:i:1:d:10.1007_s11166-017-9252-4 is not listed on IDEAS
    23. Anouar El Haji & Michał Krawczyk & Marta Sylwestrzak & Ewa Zawojska, 2016. "Time Pressure and Risk Taking in Auctions: A Field Experiment," Working Papers 2016-04, Faculty of Economic Sciences, University of Warsaw.
    24. repec:eee:ecolet:v:158:y:2017:i:c:p:54-57 is not listed on IDEAS
    25. Gelman, Sergey & Kliger, Doron, 2016. "Time-Induced Stress Effect on Financial Decision Making in Real Markets: The Case of Traffic Congestion," Annual Conference 2016 (Augsburg): Demographic Change 145915, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    time pressure; risky decisions; risk aversion; loss aversion; gain seeking; aspiration level;

    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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