Eliciting risk and time preferences under induced mood states

Andreas Drichoutis and Rodolfo Nayga

MPRA Paper from University Library of Munich, Germany

Abstract: We test whether induced mood states have an effect on elicited risk and time preferences in a conventional laboratory experiment. We jointly estimate risk and time preferences and use a mixture specification that allows choices to be consistent with Expected Utility theory or with probability weighting. Time preferences between subjects in the control, positive mood, and negative mood treatments are not statistically significantly different. However, for choices consistent with Expected Utility Theory, we find that subjects induced into a negative mood exhibit higher risk aversion than those in either the control treatment or the positive mood treatment. For choices that are consistent with probability weighting, we find that positive mood increases risk aversion. Results also suggest that risk preferences are affected by whether a cognitively demanding task precedes a risk preference elicitation task or whether subjects were placed in a gender-specific session rather than a mixed-gender session.

Keywords: discount rates; risk aversion; lab experiment; mood; affect (search for similar items in EconPapers)
JEL-codes: C91 D00 D81 (search for similar items in EconPapers)
Date: 2010-12, Revised 2011-08-27
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
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https://mpra.ub.uni-muenchen.de/33013/1/MPRA_paper_33013.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/34389/1/MPRA_paper_34389.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/37007/1/MPRA_paper_37007.pdf revised version (application/pdf)

Related works:
Journal Article: Eliciting risk and time preferences under induced mood states (2013)
Working Paper: Eliciting risk and time preferences under induced mood states (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33013

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