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Risk as Feelings

Psychological Bulletin, Vol. 127, 2001

20 Pages Posted: 11 Oct 2006  

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Elke U. Weber

Columbia Business School - Management & Psychology

Christopher K. Hsee

University of Chicago - Booth School of Business

Abstract

Virtually all current theories of choice under risk or uncertainty are cognitive and consequentialist. They assume that people assess the desirability and likelihood of possible outcomes of choice alternatives and integrate this information through some type of expectation-based calculus to arrive at decision. The authors propose an alternative theoretical perspective, the risk-as-feelings hypothesis, that highlights the role of affect experienced at the moment of decision making. Drawing on research from clinical, physiological, and other subfield of psychology, they show that emotional reactions to risky situations often drive behavior. The risk-as-feelings hypothesis is shown to explain a wide range of phenomena that have resisted interpretation in cognitive-consequentialist terms.

Keywords: choice under risk, affect, risk-as-feelings, risk preference, risk attitude

JEL Classification: D81, D11, D12, D91

Suggested Citation

Loewenstein, George and Weber, Elke U. and Hsee, Christopher K., Risk as Feelings. Psychological Bulletin, Vol. 127, 2001. Available at SSRN: https://ssrn.com/abstract=929947

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

Christopher K. Hsee (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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