Published July 3, 2014
| public
Journal Article
Risk and Reward Preferences under Time Pressure
- Creators
- Nursimulu, Anjali D.
- Bossaerts, Peter
Abstract
Financial decision making under time pressure, though ubiquitous, is poorly understood; classical and behavioral finance are silent about the time required for a decision to be made. In an experiment, calibrating allowable decision times to 1, 3, and 5 s, we find that classical moment-based preferences reflect time-invariant sensitivity to expected reward, purchase impulsiveness under extreme time pressure, and decreased aversion to variance and increased aversion to skewness with decision time. These time-varying sensitivities translate into increased probability distortions and decreased risk aversion for gains under prospect theory (PT). Strikingly, moment-based theory provides a better fit than PT.
Additional Information
© The Authors 2013. Published by Oxford University Press [on behalf of the European Finance Association]. Advance Access publication: June 27, 2013.Additional details
- Eprint ID
- 51537
- DOI
- 10.1093/rof/rft013
- Resolver ID
- CaltechAUTHORS:20141110-160957062
- Created
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2014-11-11Created from EPrint's datestamp field
- Updated
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2021-11-10Created from EPrint's last_modified field