Decision Making Under Uncertainty: The Relation between Economic Preferences and Psychological Personality Traits

Abstract

Both economists and psychologists are interested in understanding decision making under uncertainty. Yet, they rely on different concepts to analyse human behaviour: Economists use economic preference parameters rooted in utility theory, while psychologists use personality traits to describe responses to uncertain situations. Using a large sample of university students, this study examines and contrasts 5 economic preference parameters and 6 psychological personality traits that are commonly used to study individuals' attitudes towards uncertainty. A novelty of this paper is to include both the economic concept of ambiguity aversion as well as the personality trait of ambiguity intolerance. We find that standard economic preference measures based on incentivized choice tasks seem to capture rather different characteristics than psychological personality traits. In contrast, economic preference measures obtained from self-assessment questions appear more related to personality traits, especially ambiguity intolerance.

Keywords: decision making, uncertainty, preferences, personality traits, ambiguity intolerance, ambiguity aversion, risk aversion

JEL Classification: C91, D01, D81, D91