Preference Reversal in Risky Choices Under Time Pressure
Posted: 22 Mar 2009 Last revised: 4 Sep 2011
Date Written: March 13, 2010
A pervasive aspect of time pressure is the salience of negative information, which causes individuals to adopt strategies that are consistent with risk-aversion. In four studies, however, we find that time pressure reverses risk preferences: risk-seeking individuals adopt risk-averse strategies whereas risk-averse individuals adopt risk-seeking ones. Study 1 demonstrates the basic effect, while Studies 2 and 3 explore the emphasis on negative (vs. positive) outcomes as the underlying mediator. Study 4 extends the findings to the domain of regulatory focus. Taken together, the four studies reveal the existence of a preference reversal in risky choices under time pressure, in direct contrast to the extant understanding of time pressure and decision-making. Consequences for everyday decision-making and consumers are discussed.
Keywords: risk preference, time pressure, preference reversal, loss aversion, regulatory focus
JEL Classification: Z00
Suggested Citation: Suggested Citation