The formation of risk preferences throughs small-scale events

Arbeitspapier

Large, macroeconomic shocks in the past have been shown to influence economic decisions in the present. We study in an experiment with 743 subjects whether small-scale, seemingly negligible, events also affect the formation of risk preferences. In line with a reinforcement learning model, we find that subjects who won a random lottery took significantly more risk in a second lottery almost a year later. The same pattern emerges in another experiment with 136 subjects where the second lottery was played more than three years after the first lottery. So, small-scale, random, events affect the formation of risk preferences significantly.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers of the Max Planck Institute for Research on Collective Goods ; No. 2021/16

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Microeconomic Behavior: Underlying Principles ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Reinforcement learning ; risk preferences ; preference formation ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Angerer, Silvia ; Dutcher, E. Glenn ; Glätzle-Rützler, Daniela ; Lergetporer, Philipp ; Sutter, Matthias
• Event: Veröffentlichung
• (who): Max Planck Institute for Research on Collective Goods
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/245979
• Last update: 10.03.2025, 11:42 AM CET