Rapid makes risky: Time pressure increases risk seeking in decisions from experience

Madan, Christopher R.; Spetch, Marcia L.; Ludvig, Elliot Andrew

doi:10.1080/20445911.2015.1055274

Cited by 51 publications

(56 citation statements)

References 58 publications

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“…In general, behavior is observed to be more heuristic. Similar findings are obtained by Madan et al (2015), who state that under higher time pressure subjects choose risky options more often, independent of the outcome value. Additionally, they find time pressure moderately increasing risk seeking in decisions from experience.…”

supporting

confidence: 75%

No need for more time: Intertemporal allocation decisions under time pressure

Lindner

Rose

2017

Journal of Economic Psychology

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Results of standard methods of time preference elicitation can therefore not be directly mapped to environments characterized by severe time pressure since the underlying assumption of these models is that preferences are stable. To address the stability of time preferences under time pressure, we conduct a laboratory study with 144 subjects using convex time budgets (Andreoni and Sprenger, 2012) in order to elicit time preferences with and without time pressure in a within-subject design. We find lower present-bias under time pressure compared to the condition without time pressure on the aggregate, whereas utility function curvature and long-run discounting are stable across conditions. The findings are confirmed on the individual level. Embedding our results in dual-systems theory, how information is presented can serve as a potential means to exogenously decrease present-bias under time pressure. Terms of use: Documents inJEL-Classification: C91, D12, D81, D91.

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supporting

confidence: 75%

No need for more time: Intertemporal allocation decisions under time pressure

Lindner

Rose

2017

Journal of Economic Psychology

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“…Similarly, in vignette studies, time pressure led participants to search for possible safety measures providing them with more control in the risky option ('risk defusing operators'), eventually making them choose it more often (Huber and Kunz, 2007). More recently, Madan et al (2015) reported that time pressure induced a modest shift towards risk seeking when information about outcome probabilities was conveyed through experience rather than description.…”

Section: Literature Reviewmentioning

confidence: 99%

Time pressure and risk taking in auctions: A field experiment

Haji

Krawczyk

Sylwestrzak

et al. 2019

Journal of Behavioral and Experimental Economics

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Auctions often require risk taking under time pressure. However, little is known about how time pressure moderates the relationship between uncertainty of outcomes and bidding behavior. This study consists of a field experiment in which participants are invited to a Vickrey auction to elicit their willingness to pay for a lottery ticket. The time available to place a bid and also the skewness of the lottery (holding the expected value constant) are systematically manipulated. We find that under high time pressure participants are less likely to place a bid at all. Furthermore, participants who do place a bid under high time pressure bid significantly less than participants under low time pressure. The main finding is thus that increased time pressure significantly decreases risk taking. The effect seems to be particularly strong for the lottery with a high probability of winning and for female subjects.

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“…Each door/option appeared equally often on either side of the screen. Performance of lower than 60% on catch trials in either decisions from description or experience across the whole experiment was used as an exclusion criterion, following established protocol from previous experiments (Ludvig et al, 2014a(Ludvig et al, , 2014bLudvig & Spetch, 2011;Madan et al, 2014Madan et al, , 2015. Data from 18 of the 256 participants were thus excluded.…”

Section: Methodsmentioning

confidence: 99%

The Role of Memory in Distinguishing Risky Decisions from Experience and Description

Madan

Ludvig

2017

Quarterly Journal of Experimental Psychology

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Described and experienced risky choices 2 AbstractPeople's risk preferences differ for choices based on described probabilities versus those based on information learned through experience. For decisions from description, people are typically more risk averse for gains than losses. In contrast, for decisions from experience, people are sometimes more risk seeking for gains than losses, especially for choices with the possibility of extreme outcomes (big wins or big losses), which are systematically overweighed in memory.Using a within-subject design, this study evaluated whether this memory bias plays a role in the differences in risky choice between description and experience. As in previous studies, people were more risk seeking for losses than for gains in description but showed the opposite pattern in experience. People also more readily remembered the extreme outcomes and judged them as having occurred more frequently. These memory biases correlated with risk preferences in decisions from experience but not in decisions from description. These results suggest that systematic memory biases may be responsible for some of the differences in risk preference across description and experience.

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Rapid makes risky: Time pressure increases risk seeking in decisions from experience

Cited by 51 publications

References 58 publications

No need for more time: Intertemporal allocation decisions under time pressure

No need for more time: Intertemporal allocation decisions under time pressure

Time pressure and risk taking in auctions: A field experiment

The Role of Memory in Distinguishing Risky Decisions from Experience and Description

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