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Can Personality Type Explain Heterogeneity in Probability Distortions?

Journal of Neuroscience, Psychology, and Economics, Vol 6(3), September 2013, 151-166

Posted: 22 Feb 2015  

C. Monica Capra

CGU

Bing Jiang

Department of Economics and Business, Virginia Military Institute

Jan Engelmann

University of Zurich - Faculty of Economics, Business Administration and Information Technology

Gregory Berns

Emory University

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2013

Abstract

There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities nonlinearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how people distort probabilities. Despite this, little effort has been made to identify the source of heterogeneity. We explore the possibility that personality type is linked to probability distortions. Using validated psychological questionnaires, we clustered participants into distinct personality types: motivated, impulsive, and affective. We found that the motivated participants viewed gambling as more attractive, whereas the impulsive participants were the most capable of discriminating non-extreme probabilities. Our results suggest that the observed heterogeneity in probability distortions may be explained by personality profiles, which can be elicited though standard psychological questionnaires.

Keywords: Choice under risk, personality, experiments, probability weighting function

Suggested Citation

Capra, C. Monica and Jiang, Bing and Engelmann, Jan and Berns, Gregory, Can Personality Type Explain Heterogeneity in Probability Distortions? (September 1, 2013). Journal of Neuroscience, Psychology, and Economics, Vol 6(3), September 2013, 151-166. Available at SSRN: https://ssrn.com/abstract=2567901

C. Monica Capra (Contact Author)

CGU ( email )

150 E. Tenth Street
Claremont, CA 91711
United States

Bing Jiang

Department of Economics and Business, Virginia Military Institute ( email )

Virginia Military Institute
335 Scott Shipp Hall
Lexington, VA 24450
United States
540-464-7451 (Phone)
540-464-7005 (Fax)

Jan Engelmann

University of Zurich - Faculty of Economics, Business Administration and Information Technology ( email )

Zurich, 8006
Switzerland

Gregory Berns

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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