Arbeitspapier
On the psychology of the relation between optimism and risk taking
In this paper, we provide an explanation for why risk taking is related to optimism. Using a laboratory experiment, we show that the degree of optimism predicts whether people tend to focus on the positive or negative outcomes of risky decisions. While optimists tend to focus on the good outcomes, pessimists focus on the bad outcomes of risk. The tendency to focus on good or bad outcomes of risk in turn affects both the self-reported willingness to take risk and actual risktaking behavior. This suggests that dispositional optimism may affect risk taking mainly by shifting attention to specific outcomes rather than causing misperception of probabilities. In line with this, in a second study we find evidence that dispositional optimism is related to elicited parameters of rank dependent utility theory suggesting thatfocusingmay be among the psychological determinants of decision weights. Finally, we corroborate our findings with process data related to focusing showing that optimists tend to remember more and attend more to good outcomes and this in turn affects their risk taking.
- Language
-
Englisch
- Bibliographic citation
-
Series: ECONtribute Discussion Paper ; No. 223
- Classification
-
Wirtschaft
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Design of Experiments: Laboratory, Individual
Criteria for Decision-Making under Risk and Uncertainty
Microeconomic Behavior: Underlying Principles
- Subject
-
Risk taking behavior
optimism
preference measure
- Event
-
Geistige Schöpfung
- (who)
-
Dohmen, Thomas
Quercia, Simone
Willrodt, Jana
- Event
-
Veröffentlichung
- (who)
-
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
- (where)
-
Bonn and Cologne
- (when)
-
2023
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Dohmen, Thomas
- Quercia, Simone
- Willrodt, Jana
- University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
Time of origin
- 2023
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