Does risk attitude depend on whether risk is predetermined

Di Wang

Economics Letters, 2025, vol. 254, issue C

Abstract: We identify experimentally a decision-making phenomenon pertaining to pre-decision determination of uncertainty to be revealed after choice. Consequentially speaking, as long as the uncertainty resolution associated with a lottery is revealed only after choice, it should not matter whether this uncertainty is predetermined. We find that the pre-decision determination of risk has an impact on risk attitude. Specifically, subjects are less risk-averse under predetermined risk than under future-determined risk where uncertainty is resolved and revealed after decision-making. Based on the ideas of uncertainty perception and source preference, we offer a brief discussion on possible accounts for the non-neutrality towards predetermined uncertainty.

Keywords: Risk attitude; Predetermined risk; Future-determined risk; Decision under risk (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525002551

DOI: 10.1016/j.econlet.2025.112418

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