Eliciting risk and time preferences under induced mood states

Drichoutis, Andreas and Nayga, Rodolfo (2010): Eliciting risk and time preferences under induced mood states.

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 find that subjects induced into a negative mood exhibit economically significant higher risk aversion than those in the control treatment. Those in the positive mood treatment exhibit even higher risk aversion. We find no direct effect of mood states on discount rates. 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.

• Item Type: MPRA Paper
• Language: English
• Keywords: discount rates; risk aversion; lab experiment; mood; affect
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; D - Microeconomics > D0 - General > D00 - General; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior

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