The role of emotions on risk aversion: A Prospect Theory experiment

This study measures risk and loss aversion using Prospect Theory and examines the impact of emotions on these parameters. Students’ emotions were manipulated using information on rising deaths due to drug violence in Mexico and youth unemployment and Tanaka et al. (2010) methodology was employed to elicit PT parameters. We find that risk aversion increases with sadness while loss aversion is negatively influenced by anger. On average, anger reduces loss aversion by half.

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Year of publication:	2014
Authors:	Campos-Vazquez, Raymundo M. ; Cuilty, Emilio
Published in:	Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics). - Elsevier, ISSN 2214-8043. - Vol. 50.2014, C, p. 1-9
Publisher:	Elsevier
Subject:	Risk aversion \| Emotions \| Prospect Theory \| Experiment \| Mexico

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Type of publication:	Article
Classification:	C93 - Field Experiments ; D03 - Behavioral Economics; Underlying Principles ; D12 - Consumer Economics: Empirical Analysis ; O12 - Microeconomic Analyses of Economic Development ; O54 - Latin America; Caribbean
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011220527