Tempus Fugit: Time Pressure in Risky Decisions

25 Pages Posted: 19 Apr 2011

See all articles by Julius Pahlke

Julius Pahlke

Ludwig Maximilian University of Munich (LMU)

Martin G. Kocher

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Göteborg University - School of Business, Economics and Law; Queensland University of Technology - School of Economics and Finance

Stefan Trautmann

Tilburg University

Date Written: April 2011

Abstract

We study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In an experiment we find that risk aversion for gains is robust under time pressure whereas risk seeking for losses turns into risk aversion under time pressure. For mixed prospects, subjects become more loss averse and more gain seeking under time pressure, depending on the framing of the prospects. The results suggest the importance of aspiration levels under time pressure. We discuss the implications of our findings for decision making situations that involve time pressure.

Keywords: time pressure, risky decisions, risk aversion, loss aversion, gain seeking, aspiration level

JEL Classification: C91, D81

Suggested Citation

Pahlke, Julius and Kocher, Martin G. and Trautmann, Stefan, Tempus Fugit: Time Pressure in Risky Decisions (April 2011). Available at SSRN: https://ssrn.com/abstract=1809617 or http://dx.doi.org/10.2139/ssrn.1809617

Julius Pahlke (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Martin G. Kocher

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

Göteborg University - School of Business, Economics and Law ( email )

Vasagatan 1
Goteborg, 40530
Sweden

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

Stefan Trautmann

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

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