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

Raymundo Campos-Vazquez and Emilio Cuilty

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2014, vol. 50, issue C, 1-9

Abstract: 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.

Keywords: Risk aversion; Emotions; Prospect Theory; Experiment; Mexico (search for similar items in EconPapers)
JEL-codes: C93 D03 D12 O12 O54 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (51)

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Related works:
Working Paper: The role of emotions on risk aversion: a prospect theory experiment (2013)
Working Paper: The Role of Emotions on Risk Aversion: A prospect theory experiment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:50:y:2014:i:c:p:1-9

DOI: 10.1016/j.socec.2014.01.001

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