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'O Sole Mio: An Experimental Analysis of Weather and Risk Attitudes in Financial Decisions

38 Pages Posted: 12 Nov 2011 Last revised: 30 Nov 2013

Anna Bassi

UNC Chapel Hill

Riccardo Colacito

University of North Carolina Kenan-Flagler Business School

Paolo Fulghieri

University of North Carolina Kenan-Flagler Business School; European Corporate Governance Institute (ECGI)

Date Written: November 23, 2012

Abstract

While weather has been shown to affect financial markets and financial decision making, a still open question is the channel through which such influence is exerted. By employing a multiple price list method, this paper provides direct experimental evidence that sunshine and good weather promote risk taking behavior. This effect is present whether relying on objective measures of meteorological conditions or subjective weather assessments. Finally, employing a psychological test, we find evidence that weather may affect individual risk tolerance through its effect on mood.

Keywords: Experiments, Risk Aversion, Weather, Sunshine

JEL Classification: C91, D03, G02

Suggested Citation

Bassi, Anna and Colacito, Riccardo and Fulghieri, Paolo, 'O Sole Mio: An Experimental Analysis of Weather and Risk Attitudes in Financial Decisions (November 23, 2012). Available at SSRN: https://ssrn.com/abstract=1958215 or http://dx.doi.org/10.2139/ssrn.1958215

Anna Bassi

UNC Chapel Hill ( email )

361 Hamilton Hall
CB#3265
Chapel Hill, NC 27599-3265
United States
(919) 962-0404 (Phone)
(919) 962-0432 (Fax)

HOME PAGE: http://www.unc.edu/~abassi

Riccardo Colacito (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

HOME PAGE: http://www.unc.edu/~colacitr

Paolo Fulghieri

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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