Risk as Feelings
Carnegie Mellon University - Department of Social and Decision Sciences
Elke U. Weber
Columbia Business School - Management & Psychology
Christopher K. Hsee
University of Chicago - Booth School of Business
Psychological Bulletin, Vol. 127, 2001
Virtually all current theories of choice under risk or uncertainty are cognitive and consequentialist. They assume that people assess the desirability and likelihood of possible outcomes of choice alternatives and integrate this information through some type of expectation-based calculus to arrive at decision. The authors propose an alternative theoretical perspective, the risk-as-feelings hypothesis, that highlights the role of affect experienced at the moment of decision making. Drawing on research from clinical, physiological, and other subfield of psychology, they show that emotional reactions to risky situations often drive behavior. The risk-as-feelings hypothesis is shown to explain a wide range of phenomena that have resisted interpretation in cognitive-consequentialist terms.
Number of Pages in PDF File: 20
Keywords: choice under risk, affect, risk-as-feelings, risk preference, risk attitude
JEL Classification: D81, D11, D12, D91
Date posted: October 11, 2006
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