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Negative Tail Events, Emotions and Risk Taking
Journal article   Open access

Negative Tail Events, Emotions and Risk Taking

Brice Corgnet, Camille Cornand and Nobuyuki Hanaki
The Economic Journal, Vol.134(658), pp.538-578
01/02/2024

Abstract

We design a novel experiment to assess investors’ behavioural and physiological reactions to negative tail events. Investors who observed, without suffering from, tail events decreased their bids whereas investors suffering tail losses increased them. However, the increase in bids after tail losses was not observed for those who exhibited no emotional arousal. This suggests that emotions are key in explaining Prospect Theory prediction of risk seeking in the loss domain.
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https://doi.org/10.1093/ej/uead080View
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Collaboration types
Domestic collaboration
International collaboration
Citation topics
6 Social Sciences
6.73 Social Psychology
6.73.130 Cognitive Biases
Web of Science research areas
Economics
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