The Emotional Information Processing System is Risk Averse: Ego-Depletion and Investment Behavior

Abstract

Two experiments show that a shortage of self-regulatory resources results in more risk aversion in mixed-gamble (gain/loss) situations. The findings support a dual process view that distinguishes between a rational and an affective information processing system, in which self-regulatory resources are the necessary fuel for the rational system. Depending on the expected values of risk seeking versus risk averse behavior, ego depletion can have negative (experiment 1) as well as positive (experiment 2) consequences for investment behavior.

Keywords: emotional information processing system, risk averse, ego depletion, investment behavior

JEL Classification: C44, M31, M, G11, G14