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Of two minds: An experiment on how time scarcity shapes risk-taking behavior

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  • Sergio Almeida
  • Mauro Rodrigues

Abstract

Several studies report that the brain evaluates prospects and executes decisions as the outcome of two mental processing types: one described as slow and reflective and the other as fast and intuitive. We investigate how these two mental processes affect risk-taking behavior by using time pressure to establish an intuitive response. We observe that time constraints do not change risk attitudes. Furthermore, it is only when subjects are given ample time to decide and instructed to reflect that they show the well-documented shift of risk preferences across the domain of losses and gains.

Suggested Citation

  • Sergio Almeida & Mauro Rodrigues, 2021. "Of two minds: An experiment on how time scarcity shapes risk-taking behavior," Working Papers, Department of Economics 2021_18, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2021wpecon18
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    File URL: http://www.repec.eae.fea.usp.br/documentos/Almeida_Rodrigues_18WP.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Risk-taking; time scarcity; dual-process cognition; fast-thinking; gain-loss framing;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • 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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