Emotions and Risky Choice

Revision with unchanged content. The objective of the present book is to show that emotions have to be taken seriously in a satisfactory explanation of economically relevant risky choice behaviour. Therefore, theoretical and experimental evidence on emotions and risky choice is provided from an interdisciplinary perspective, integrating economic and psychological approaches. Thereby, the theoretical study will explore how the 'psychology of emotions' may find its way in economic analysis in order to enhance the explanatory value of economic models of risky choice. Despite growing interest in the topic of emotion in theoretical economic research, empirical (i.e. experimental) economic research concerning emotions and risky choice is still in its infancy. The reported experimental study helps to fill this gap. The author investigates whether and how emotions measured through self-reports affect risky choice modelled as a dynamic investment choice. The experimental study will show that actual risky choices deviate from standard economic predictions and emotions are able to provide an explanation for the observed (risky choice) behaviour.