Craving for Money? Evidence from the Laboratory and the Field

Abstract

We propose a new model of choice under repeated exposure to gambles. In it, the agent may come to choose a negative expected value, negative skew gamble, due to a behavioral bias that has a neurobiological foundation. We document evidence for the model using a combination of laboratory and field data. The findings bring novel insights into the motivations underlying investor decisions, the issue of problem gambling in recreational gamblers, and the topic of self-control.

Keywords: Decision making under uncertainty, self-control, craving, option pricing, neurofinance

JEL Classification: C91, D87, G41