Emotions and Risk Attitudes
- (pp. 527-58)
Abstract
Previous work has shown that preferences are not always stable across time, but surprisingly little is known about the reasons for this instability. I examine whether variation in people's emotions over time predicts changes in risk attitudes. Using a large-panel dataset, I identify happiness, anger, and fear as significant correlates of within-person changes in risk attitudes. Robustness checks indicate a limited role for alternative explanations. An event study around the death of a parent or child further confirms a large relationship between emotions and risk attitudes.Citation
Meier, Armando N. 2022. "Emotions and Risk Attitudes." American Economic Journal: Applied Economics, 14 (3): 527-58. DOI: 10.1257/app.20200164Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- I31 General Welfare; Well-Being
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