scholarly journals Impact of Induced Moods, Sensation Seeking, and Emotional Contagion on Economic Decisions Under Risk

2022 ◽  
Vol 12 ◽  
Author(s):  
Kirill Efimov ◽  
Ioannis Ntoumanis ◽  
Olga Kuskova ◽  
Dzerassa Kadieva ◽  
Ksenia Panidi ◽  
...  

In addition to probabilities of monetary gains and losses, personality traits, socio-economic factors, and specific contexts such as emotions and framing influence financial risk taking. Here, we investigated the effects of joyful, neutral, and sad mood states on participants’ risk-taking behaviour in a simple task with safe and risky options. We also analysed the effect of framing on risk taking. In different trials, a safe option was framed in terms of either financial gains or losses. Moreover, we investigated the effects of emotional contagion and sensation-seeking personality traits on risk taking in this task. We did not observe a significant effect of induced moods on risk taking. Sad mood resulted in a slight non-significant trend of risk aversion compared to a neutral mood. Our results partially replicate previous findings regarding the presence of the framing effect. As a novel finding, we observed that participants with a low emotional contagion score demonstrated increased risk aversion during a sad mood and a similar trend at the edge of significance was present in high sensation seekers. Overall, our results highlight the importance of taking into account personality traits of experimental participants in financial risk-taking studies.

2021 ◽  
Author(s):  
Cai Xing ◽  
Tingting Liu ◽  
Xi Zhang

It has been well documented that men are much more likely to provide heroic assistance in emergencies (Johnson, 1996). However, such heroic rescue disobeys the theory of evolution (Darwin, 1871). Studies investigated charitable donations suggested that public prosocial behaviors might be considered as costly signaling behaviors, serving the function of displaying one’s wealth and generosity, with the ultimate goal of attracting potential mates (Griskevicius et al., 2007). Although heroic rescue meets the four criteria of costly signaling behaviors, there was no direct evidence supporting the notion that heroic rescue, like public charity, also serves the function of attracting potential mates. The present study directly tests this possibility by examining the effect of mating motivation on men and women’s heroic rescue tendencies in emergent situations. The present study used a 2 (gender: male vs. female) × 2 (mating motivation induction vs. control condition) study design, and participants (N = 196, 90 males and 106 females; Mage = 22.36, SD = 2.89) were randomly assigned to the mating condition and control condition. In line with the previous studies (Durante & Li, 2009; Griskevicius et al., 2007; Hill & Durante, 2011; Roney, 2003; Wilson & Daly, 2004), mating motivation was induced by photographs of highly attractive opposite sex. Then, heroic rescue tendencies were measured by the questionnaire of Griskevicius et al. (2007), which consisted of five emergent situations. Participants’ risk-taking tendencies on financial decisions were also measured by a 10-item questionnaire developed by Liu (2010). The total scores of each of these two questionnaires served as the dependent variables. The results of the experiments showed a significant interaction between gender and mating priming on heroic behaviors: after mating motivation induction, male participants showed higher intentions of heroic rescue, whereas female participants showed lower intentions of heroic rescue. The present study also replicated previous findings (McAlvanah, 2009; Li & Zhang, 2010) regarding the effect of mating motivation priming on financial risk taking: mating motivation induction increased risk-taking tendency in financial decisions, males tend to be more risk seeking in making financial decisions, and there was no significant interaction between gender and mating priming on financial risk-taking decisions. Results from the financial decisions further confirmed the representativeness of the sample recruited in the current study and further validated the results on heroic behaviors. Based on the Costly Signaling Theory (Smith & Bird, 2001), these results concurred with the hypotheses that heroic behaviors served the function of displaying men’s advantages, such as vigor and responsibility, to potential mates and winning the intersexual selection (Farthing, 2005; Kelly & Dunbar, 2001). However, for women, the high-risk of heroic behaviors have potential harm to their offspring and are unattractive to men (Taylor et al., 2000). Thus, after eliciting the mating motivation, women would avoid the risk and reduced their intentions to offer heroic rescue in emergencies.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci

PurposeThis study aims to quantitatively classify the articles with risk-taking and risk aversion keywords and to investigate whether there is a similar emphasis in articles as parallel to the change in risk appetite in the market in the period before the crisis (bubble period) and after the crisis.Design/methodology/approachIn this study, a bibliometric analysis of the articles in which the keywords risk-taking and risk aversion are mentioned together with the word finance in the journals scanned in the Web of Science between 2004 and 2012 was performed. In this context, 936 articles were specified. Analyses were made using the CiteSpace Java program.FindingsThe three journals with the most articles with these characteristics are Journal of Banking and Finance, Journal of Financial Economics and Strategic Management Journal. Along with these two main keywords, the other two most used keywords were “model” and “performance”. In addition, the keywords “attitude”, “corporate governance”, “choice” and “determinant” were used more in the post-crisis period. On the other hand, concepts such as investor sentiment or emotions were not amongst the 10 most frequently used keywords during the nine years. This can be considered as an indicator that risk is being modelled, but emotions are relatively neglected. As a result, the findings of this study show that academic papers do not develop in connection with the mood and excitement in the market.Originality/valueThis study is one of the first studies to examine the reflection of risk appetite in the market on academic papers on financial risk-taking and aversion and to investigate whether the situation in the market and the development in publications are related.


1991 ◽  
Vol 5 (4) ◽  
pp. 525-530 ◽  
Author(s):  
Alan Wong ◽  
Bernardo J. Carducci

2009 ◽  
Vol 47 (8) ◽  
pp. 917-921 ◽  
Author(s):  
Kevin L. Zabel ◽  
Andrew N. Christopher ◽  
Pam Marek ◽  
Mareike B. Wieth ◽  
Jacqueline J. Carlson

2015 ◽  
Vol 42 (1) ◽  
pp. 34-41 ◽  
Author(s):  
Alan Wong ◽  
Bernie Carducci

Purpose – The purpose of this paper is to determine relationships between financial risk tolerance and the personality traits of sensation-seeking, locus of control, ambiguity tolerance, and financial dishonesty. Design/methodology/approach – A pretested questionnaire was used to gather information from 255 respondents. With risk tolerance as a criterion variable and the four personality traits as predictor variables, a regression procedure was performed to determine which variables contributed to the variability of the criterion variable and the extent of such contribution. An analysis was also done to find out whether gender, age, GPA, and academic standing had an influence on each personality trait’s contribution to risk tolerance. Findings – Risk tolerance is directly related to sensation-seeking and the link is so strong that it is not mitigated by the effects of gender, age, GPA, and college academic standings. As for locus of control, the more one believes one has control over one’s outcome, the higher risk one can tolerate. Surprisingly, there is no relationship between risk and ambiguity tolerances. Dishonesty also does not affect risk tolerance behavior. However, the relationship is found to exist among younger individuals and those with lower GPA, possibly due to not having reached an adequate level of matured or critical reasoning yet. Originality/value – The relationship between risk tolerance and sensation-seeking is an established fact but whether the relationship still holds across several demographic groups is part of this study’s focus. Although much has been done on risk tolerance, very little has been done on its relationship to locus of control, ambiguity tolerance, and financial dishonesty.


2020 ◽  
Vol 2 (2) ◽  
pp. 561
Author(s):  
Terecia Anabell Makangiras ◽  
Khairina Natsir

This study examines the impact of Personality Traits, Demographics Factor, and Risk Taking Attitude to Investment Decision Toward Usaha Mikro, Kecil dan Menengah (UMKM). The sample in this study are 100 respondent selected through the purposive sampling method. Sampling techniques using questionnaires online as well as directly. Data processing is done using smart PLS software. The results of this study show that openness to experience has a significant influence on the investment decision. Conscientiousness has a significant influence on investment decision. Demographic factor has no significant influence on investment decision. Meanwhile, risk aversion has a significant influence on investment decision. Tujuan penelitian ini adalah untuk mengetahui pengaruh personality traits, demographic factor, dan risk-taking attitude terhadap investment decision pada pengusaha mikro, kecil dan menengah. Sampel penelitian ini adalah sebanyak 100 responden yang dipilih melalui metode purposive sampling. Teknik pengambilan sampel menggunakan kuesioner secara online maupun secara langsung. Pengolahan data dilakukan dengan menggunakan software smart PLS. Hasil penelitian ini menunjukkan bahwa openness to experience memiliki pengaruh signifikan terhadap investment decision. Conscientiousness memiliki pengaruh signifikan terhadap investment decision. Demographic factor tidak memiliki pengaruh signifikan terhadap investment decision. Sedangkan, risk aversion memiliki pengaruh signifikan terhadap investment decision.


2020 ◽  
Author(s):  
Gregory Russell Samanez-Larkin ◽  
Gary Mottola ◽  
Darby Heflin ◽  
Lei Yu ◽  
Patricia Boyle

Taking excessive financial risk in older age can have harmful, far-reaching consequences as opportunities to recover lost wealth are limited. Better understanding the mechanisms of financial risk taking in older age is critically important for both identifying vulnerabilities in certain older adults and for developing interventions to empower aging investors to make wise financial choices into the most advanced ages. The goals of the present study were to identify age differences in financial literacy, confidence in financial knowledge, and risk taking and how literacy and confidence were related to financial risk taking across older adults with and without cognitive impairment (ages 58–101). Using cross-sectional data from the Rush Memory and Aging Project, analyses revealed that risk aversion was higher and self-reported willingness to take financial risks was lower at older ages. Financial literacy was similar across the sixties and seventies but lower at the oldest ages. However, confidence in financial knowledge was not associated with age when controlling for financial literacy. In exploratory analyses, a measure of overconfidence in financial knowledge was positively associated with self-reported financial risk tolerance but not a behavioral measure of risk aversion. The overconfidence effect on risk tolerance did not vary across individuals with no cognitive impairment or Mild Cognitive Impairment (MCI). Overconfidence accounted for about 6% of the variance in financial risk tolerance. The present results suggest that overconfidence may contribute to risky financial behavior. Calibration of confidence levels to actual literacy is a potential target for future interventions aimed at protecting senior investors.


2021 ◽  
Vol 12 ◽  
Author(s):  
Sandra Chi Yiu Wong ◽  
Mary Chung Mun Ng ◽  
Joe Kwun Nam Chan ◽  
Martha Sin Ki Luk ◽  
Simon Sai Yu Lui ◽  
...  

Altered risk-taking propensity is an important determinant of functional impairment in bipolar disorder. However, prior studies primarily assessed patients with chronic illness, and risk-taking has not been evaluated in the early illness course. This study investigated risk-taking behavior in 39 euthymic early-stage bipolar disorder patients aged 16–40 years who were treated within 3 years from their first-episode mania with psychotic features and 36 demographically-matched healthy controls using the Balloon Analog Risk Task (BART), a well-validated risk-taking performance-based paradigm requiring participants to make responses for cumulative gain at increasing risk of loss. Relationships of risk-taking indices with symptoms, self-reported impulsivity, cognitive functions, and treatment characteristics were also assessed. Our results showed that patients exhibited significantly lower adjusted scores (i.e., average balloon pumps in unexploded trials) (p = 0.001), lower explosion rate (p = 0.007) and lower cumulative scores (p = 0.003) than controls on BART, indicating their suboptimal risk-taking performance with increased propensity for risk aversion. Risk-taking indices were not correlated with any symptom dimensions, self-reported impulsivity, cognitive functions or antipsychotic dose. No significant difference was observed between patients with and without antipsychotic medications on self-reported impulsivity or any of the BART performance indices. This is the first study to examine risk-taking behavior in early-stage bipolar disorder with history of psychosis and indicates that patients displayed altered risk-taking with increased risk aversion compared with controls. Further research is needed to clarify longitudinal trajectory of risk-taking propensity and its relationships with psychosis and functional outcome in the early stage of bipolar disorder.


2001 ◽  
Vol 15 (1_suppl) ◽  
pp. S105-S122 ◽  
Author(s):  
Tomasz Zaleskiewicz

In economic theories it is assumed that risk aversion is a typical human attitude toward risk, and differences are determined by the curvature of the utility function. The results of psychological studies have indicated, however, that people differ in how they make financial decisions under uncertainty and what motivates them to take economic risks. This paper introduces two kinds of risk taking, instrumental risk taking and stimulating risk taking, and reports their empirical examination in two studies. The purpose of these studies was to test the reliability and validity of the Stimulating–Instrumental Risk Inventory—a method used to measure the two risk taking tendencies. It was found that instrumental risk taking is related to risk preference in the investment domain and is determined by personality traits connected with orientation toward the future, the tendency to think rationally, impulsivity, and sensation seeking. Stimulating risk taking was found to be related to the preference for recreational, ethical, health, and gambling risks and was associated with personality features connected with paratelic orientation, arousal seeking, impulsivity, and strong sensation seeking. Copyright © 2001 John Wiley & Sons, Ltd.


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