Risk and rationality: The effects of mood and decision rules on probability weighting
Adrian Bruhin () and
Journal of Economic Behavior & Organization, 2011, vol. 78, issue 1, 14-24
Empirical research has shown that people tend to overweight small probabilities and underweight large probabilities when valuing risky prospects, but little is known about factors influencing the shape of the probability weighting curve. Based on a laboratory experiment with monetary incentives, we demonstrate that pre-existing good mood is significantly associated with women’s probability weights: Women in a better than normal mood tend to weight probabilities relatively more optimistically. Many men, however, seem to be immunized against effects of incidental mood by applying a mechanical decision criterion such as maximization of expected value.
Keywords: Probability weighting function; Risk taking behavior; Incidental emotions; Rationality; Gender differences (search for similar items in EconPapers)
JEL-codes: C49 D81 (search for similar items in EconPapers)
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Journal Article: Risk and rationality: The effects of mood and decision rules on probability weighting (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:78:y:2011:i:1:p:14-24
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