While economic models of risky choice assume a concave utility function for gains, experimental evidence reveals situations where otherwise risk-averse decision makers show risk-seeking behavior. In this article, we analyze a specific effect called attraction to chance and discuss the role of emotions in risky decision making as an explaining factor for this particular effect. In an experiment, we replicate the behavioral results on attraction to chance from a previous study and add physiological measures for the choice process. We find that attraction to chance can be explained by differences in emotions the subjects experience during the dynamic processes of different types of lotteries. These emotions can be cognitively reflected by the decision maker at the moment of choice and incorporated in expected utility. Therefore, we show the necessity to account for the fact that decision makers perceive lotteries as dynamic processes rather than as indivisible realizations of random variables.
- attraction to chance,
- decision making under risk,
- heart rate,
- skin conductance
Available at: http://works.bepress.com/marc_adam/7/