Abstract
This article studies the stability of risk-preference during the COVID-19 pandemic. The results differ between risk-preference measurements and also men and women. We use March 13, 2020, when President Trump declared a national state of emergency as a time anchor to define the pre-pandemic and on-pandemic periods. The pre-pandemic experiment was conducted on February 21, 2020. There are three on-pandemic rounds conducted 10 days, 15 days, and 20 days after the COVID-19 emergency declaration. We include four different risk-preference measures. Men are more sensitive to the pandemic and become more risk-averse based on the Balloon Analogue Risk Task (BART). Women become more risk-averse in the Social and Experience Seeking domains based on the results from the Domain-Specific Risk-Taking (DOSPERT) and Sensation Seeking Scales (SSS). Both men's and women's risk-preference are stable during COVID-19 based on a Gamble Choice (GC) task. The results match our hypotheses which are based on the discussion about whether the psychological construct of risk-preference is general or domain-specific. The differential outcomes between incentivized behavioral and self-reported propensity measures of risk-preference in our experiment show the caveats for studies using a single measure to test risk-preference changes during COVID-19.
Highlights
Risk preferences are a key component of individual decision-making and behavior
In Balloon Analogue Risk Task (BART), subjects play with insurance options in the first and last balloon, and they play the normal balloon without insurance for the middle 28 balloons
We focus on the average number of pumps of the middle 28 balloons to analyze the risk-taking behavior measured by BART
Summary
Risk preferences are a key component of individual decision-making and behavior. The question of whether risk preferences are stable over time or under different contexts has received a great deal of attention in previous literature (Anderson and Mellor, 2009; Schildberg-Hörisch, 2018). Angrisani et al (2020), Lohmann et al (2020), and Drichoutis and Nayga (2021) find no significant change in risk preferences during COVID-19; Gassmann et al (2020) and Shachat et al (2021b) suggest less risk aversion or increased risk tolerance during COVID-19; the results from Harrison et al (2020) and Li et al (2021), exhibit more risk aversion of subjects under COVID-19; Shachat et al (2021a) find decreased risk tolerance in the loss domain and less risk aversion in the gain domain All of these studies use only one (type) measurement of risk-preference, and they all use experiments conducted in 2019 as a pre-pandemic baseline. We find a gender gap in risk preferences in the pre-pandemic period based on BART, this difference disappears during the pandemic In both DOSPERT and SSS, women respond more to COVID-19 compared to men and become more risk-averse in the specific Social and Experience Seeking domains.
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