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  The Formation of Risk Preferences Through Small-Scale Events

Angerer, S., Dutcher, E. G., Glätzle-Rützler, D., Lergetporer, P., & Sutter, M. (2021). The Formation of Risk Preferences Through Small-Scale Events.

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 Creators:
Angerer, Silvia, Author
Dutcher, E. Glenn, Author
Glätzle-Rützler, Daniela, Author
Lergetporer, Philipp, Author
Sutter, Matthias1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Reinforcement learning, risk preferences, preference formation, experiment
 JEL: C91 - Laboratory, Individual Behavior
 JEL: D01 - Microeconomic Behavior: Underlying Principles
 JEL: D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
 Abstract: Large, macroeconomic shocks in the past have been shown to influence economic decisions in the present. We study in an experiment with 743 subjects whether small-scale, seemingly negligible, events also affect the formation of risk preferences. In line with a reinforcement learning model, we find that subjects who won a random lottery took significantly more risk in a second lottery almost a year later. The same pattern emerges in another experiment with 136 subjects where the second lottery was played more than three years after the first lottery. So, small-scale, random, events affect the formation of risk preferences significantly.

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 Dates: 2021-08-23
 Publication Status: Published online
 Pages: -
 Publishing info: Bonn : Max Planck Institute for Research on Collective Goods, Discussion Paper 2021/16
 Table of Contents: -
 Rev. Type: -
 Identifiers: -
 Degree: -

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