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Tempus Fugit: Time Pressure in Risky Decisions

We study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In two experiments we find that time pressure has no effect on risk attitudes for gains, but increases risk aversion for losses. For mixed prosp...

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Published in:	Management science 2013-10, Vol.59 (10), p.2380-2391
Main Authors:	Kocher, Martin G., Pahlke, Julius, Trautmann, Stefan T.
Format:	Article
Language:	English
Subjects:	ASPIRATION LEVEL aspiration levels Attitudes AVERSION Behavior Behavioral economics CHOICE Decision making Economic uncertainty ECONOMICS Economics and Business Ekonomi och näringsliv EXPECTED UTILITY Expected values Experimental economics Experiments Financial economics Financial risk gain seeking GENDER-DIFFERENCES Heuristic INCENTIVES Loss aversion Management science MONEY PROBABILITY PROSPECT-THEORY Risk aversion Risk management Securities markets Stress Studies Time pressure
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creator	Kocher, Martin G. Pahlke, Julius Trautmann, Stefan T.
description	We study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In two experiments we find that time pressure has no effect on risk attitudes for gains, but increases risk aversion for losses. For mixed prospects, subjects become simultaneously more loss averse and more gain seeking under time pressure, depending on the framing of the prospects. The results suggest the importance of aspiration levels, and thus the overall probability to break even, under time pressure. We discuss the implications of our findings for decision-making situations that involve time pressure. This paper was accepted by Uri Gneezy, behavioral economics.
doi_str_mv	10.1287/mnsc.2013.1711
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source	International Bibliography of the Social Sciences (IBSS); Informs; JSTOR Archival Journals and Primary Sources Collection; BSC - Ebsco (Business Source Ultimate)
subjects	ASPIRATION LEVEL aspiration levels Attitudes AVERSION Behavior Behavioral economics CHOICE Decision making Economic uncertainty ECONOMICS Economics and Business Ekonomi och näringsliv EXPECTED UTILITY Expected values Experimental economics Experiments Financial economics Financial risk gain seeking GENDER-DIFFERENCES Heuristic INCENTIVES Loss aversion Management science MONEY PROBABILITY PROSPECT-THEORY Risk aversion Risk management Securities markets Stress Studies Time pressure
title	Tempus Fugit: Time Pressure in Risky Decisions
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