When Imagining Future Wealth Influences Risky Decision Making

Judgment and Decision Making, 2013, 8 (3): 268-277

10 Pages Posted: 5 Jun 2013

See all articles by Adam Eric Greenberg

Adam Eric Greenberg

Bocconi University - Department of Marketing

Date Written: December 8, 2009

Abstract

The body of literature on the relationship between risk aversion and wealth is extensive. However, little attention has been given to examining how future realizations of wealth might affect (current) risk decisions. Using paired lottery choice experiments and exposing subjects experimentally to imagined future wealth frames, I find that individuals are more risk-seeking if they are asked to imagine that they will be wealthy in the future. Yet I find that individuals are not significantly more risk-averse if they are asked to imagine that they will be poor in the future. I discuss theoretical and policy implications of these findings, including why savings rates are so low in the United States.

Keywords: Risky Decision Making, Framing, Wealth, Savings, Expected Utility

JEL Classification: B49, C91, D03, D81, D91

Suggested Citation

Greenberg, Adam Eric, When Imagining Future Wealth Influences Risky Decision Making (December 8, 2009). Judgment and Decision Making, 2013, 8 (3): 268-277, Available at SSRN: https://ssrn.com/abstract=2273592

Adam Eric Greenberg (Contact Author)

Bocconi University - Department of Marketing

Via Roentgen, 1 (4th floor)
Milan, MI 20136
Italy

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