Do Affective States Influence Risk Preferences?

Theresa Treffers (), Philipp Koellinger and Arnold Picot
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Theresa Treffers: Private University Seeburg Castle

Schmalenbach Business Review, 2016, vol. 17, issue 3, No 3, 309-335

Abstract: Abstract Recent discussions in decision sciences and economics stress the potential impact of affect on decision outcomes. In this study, we conducted incentive-compatible laboratory experiments (N = 253) to investigate whether affect causes temporary fluctuations in risk preferences. In particular, we employed film clips to induce participants into joyful, fearful and sad affective states and subsequently elicited risk preferences by asking the participants to make choices among different lotteries. The financial consequences of the lottery choices varied randomly among the fixed-, low-, and high-stakes treatment groups. We find only weak evidence that affective states influence risk preferences. In particular, we find some evidence that sadness leads to risk aversion, but we find no effects for joy and fear. Our findings question recent claims in the literature that the relationship between affect and risk preferences is strong and unambiguous.

Keywords: Affect; Risk preferences; Incentive-compatible; Laboratory experiments; Financial stakes; D03; D81; C91 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s41464-016-0018-3

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