Emotion, Decision, and Risk: Betting on Gambles versus Betting on People

Abstract

ABSTRACTWe examined the effects of two emotions, fear and anger, on risk‐taking behavior in two types of tasks: Those in which uncertainty is generated by a randomizing device (“lottery risk”) and those in which it is generated by the uncertain behavior of another person (“person‐based risk”). Participants first completed a writing task to induce fear or anger. They then made choices either between lotteries (Experiment 1) or between actions in risky two‐person decisions (Experiments 2 and 3). The experiments involved substantial real‐money payoffs. Replicating earlier studies (which used hypothetical rewards), Experiment 1 showed that fearful participants were more risk‐averse than angry participants in lottery‐risk tasks. However—the key result of this study—fearful participants were substantiallylessrisk‐averse than angry participants in a two‐person task involving person‐based risk (Experiment 2). Experiment 3 offered options and payoffs identical to those of Experiment 2 but with lottery‐type risk. Risk‐taking returned to the pattern of Experiment 1. The impact of incidental emotions on risk‐taking appears to be contingent on the class of uncertainty involved. For lottery risk, fear increased the frequency of risk‐averse choices and anger reduced it. The reverse pattern was found when uncertainty in the decision was person‐based. Further, the effect was specifically on differences in willingness to take risks rather than on differences in judgments of how much risk was present. The impact of different emotions on risk‐taking or risk‐avoiding behavior is thus contingent on the type, as well as the degree, of uncertainty the decision maker faces. Copyright © 2010 John Wiley & Sons, Ltd.