Risk Preferences and the Role of Emotions

24 Pages Posted: 5 Mar 2018

See all articles by M. Vittoria Levati

M. Vittoria Levati

Max Planck Society for the Advancement of the Sciences - Strategic Interaction Group

Chiara Nardi

University of Verona - Department of Economics

Anna Conte

University of Westminster

Date Written: April 2018

Abstract

There is a large volume of research showing that emotions have relevant effects on decision‐making. We contribute to this literature by experimentally investigating the impact of four specific emotional states—joviality, sadness, fear and anger—on risk attitudes. In order to do so, we fit two models of behaviour under risk: the expected utility model and the rank dependent expected utility model, assuming several functional forms of the weighting function. Our results indicate that all emotional states mitigate risk aversion. Furthermore, we show that there are some differences across gender and participants’ experience in laboratory experiments.

Suggested Citation

Levati, M. Vittoria and Nardi, Chiara and Conte, Anna, Risk Preferences and the Role of Emotions (April 2018). Economica, Vol. 85, Issue 338, pp. 305-328, 2018. Available at SSRN: https://ssrn.com/abstract=3133419 or http://dx.doi.org/10.1111/ecca.12209

M. Vittoria Levati

Max Planck Society for the Advancement of the Sciences - Strategic Interaction Group ( email )

D-07745 Jena
Germany

Chiara Nardi

University of Verona - Department of Economics

Via Cantarane, 24
37129 Verona
Italy

Anna Conte (Contact Author)

University of Westminster ( email )

309 Regent Street
London, W1R 8AL
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
114
PlumX Metrics