Many important decisions are made without precise information about the probabilities of the outcomes. In such situations, individual ambiguity attitudes influence decision making. The present study identifies emotions as a transient cause of ambiguity attitudes. We conducted two random-assignment, incentive-compatible laboratory experiments, varying subjects' emotional states. We find that sadness induces choices that are closer to ambiguity-neutral attitudes compared with the joy, fear, and control groups, where decision makers deviate more from payoff-maximizing behavior.

2360, Ambiguity attitude, D03, D81, Emotion, Experiment, Sadness,
ERIM Top-Core Articles
Journal of Economic Psychology
Erasmus School of Economics

Baillon, A, Koellinger, Ph.D, & Treffers, T. (2016). Sadder but wiser: The effects of emotional states on ambiguity attitudes. Journal of Economic Psychology, 53, 67–82. doi:10.1016/j.joep.2015.12.008