Risk Aversion and Emotions

Abstract

We consider the relationship between emotions and decision‐making under risk. Specifically, we examine the emotional correlates of risk‐averse decisions. In our experiment, individuals' facial expressions are monitored with face reading software, as they are presented with risky lotteries. We then correlate these facial expressions with subsequent decisions in risky choice tasks. We find that a more positive emotional state is positively correlated with greater risk taking. The strength of a number of emotions, including fear, happiness, anger and surprise, is positively correlated with risk aversion.

Prudence, Emotional State, Personality, and Cognitive Ability

“…Our results as a whole indicate that stronger emotions tend to be associated with greater prudence, though all else equal, more positive emotional state correlates with less prudence. This pattern of results is similar to those observed by Nguyen and Noussair (2014) for risk aversion. They found that stronger emotions were correlated with more risk averse choices, and positive valence with less risk averse choices.…”

“…These propositions are supported by experimental studies (Lerner and Keltner, 2001; Kugler et al, 2012), in which emotions are induced prior to a risky choice task. Recent work by Nguyen and Noussair (2014), in which emotions are observed and tracked rather than induced, reports that fear, happiness, and anger all correlate positively with risk aversion, while emotional valence correlates negatively with risk aversion (negative emotions are associated with risk aversion).…”

Shape-shifter and Agenda Setter: The Influence of Emotion in Social Work Practice and Practice Education

“…Emotion is one such concept (Hascher, 2010;Keinemans, 2015). Accepting efforts to explain and understand what emotion is, leads to a tacit acceptance that emotions are psychological terms created to describe physiological responses (Nguyen & Noussair, 2014): emulating a constructivist perspective, such a stance recognises the layered nature of emotion. The initial element, the inception of emotion, is not, as later considered, without contest and it would perhaps be wise to not think in linear terms, rather to see the manifestation of emotion as a confluence of attributes, predominantly responses and perceptions, which are then articulated through a language system rooted in shared meaning.…”

“…Surveying the emotional landscape more extensively, research exploring the relationship between economic risk taking and emotion has considered the effects of mood on behaviour and, once more, illustrates the point that feelings can exert considerable influence on perception and action: Nguyen & Noussair (2014) found that more positive emotional valence was associated with greater risk tolerance, while the emotions of fear, anger, happiness and surprise were associated with more risk-adverse decision making (p. 310). From more familiar terrain, Hascher (2010) states that theories considering the influence of emotion on learning, including the 'mood-congruence-hypothesis'; where an individual's current mood state is seen to aid the recall of information which carries similar valence; and 'mood as information'; where mood is believed to evoke an aligned reaction; are too simplistic, contending 'one of the key variables seems to be the subjective importance of the information for the learners' (p. 16).…”

“…What this entity looks and feels like is not entirely definitive, cloaked, as it is, with some definitional 'confusion' (Hascher, 2010, p. 13). Within the literature (Hascher, 2010;Keinemans, 2015;Litvack, Bogo & Mishna, 2010;Maidment & Crisp, 2011;Nguyen & Noussair, 2014) a range of perspectives and semantical positions abound, such that emotion resembles something a kin to a gelatinous mass: boundaried, detectible and recognisable, yet malleable, indeterminate and abstract. Lacking a clear-cut definition (Keinemans, 2015) and with terms such as feeling, mood and affect attracting similar associations (Hascher, 2010), emotions are, perhaps, better viewed as something more akin to nebulous umbrella constructs that are 'ultimately psychological terms describing profiles of physiological responses' (Nguyen & Noussair, 2014, p. 296).…”