Experiments in Decision-Making under Risk

This thesis presents experimental research on deviations from the standard theory of decision-making under risk. It focuses on two types of situations in which they are likely to occur. In the first part, the case of individual decision making with delayed resolution of risk is considered. It is shown that anticipatory emotions, typically neglected in economic analysis, influence behavior. In particular, negative emotions, such as dread and anxiety contribute to dislike of delay in risk resolution over and above the impact of the standard planning motives. On the other hand, positive emotions, such as hope and excitement, may make delayed resolution of a right-kewed gamble (such as a lottery ticket) attractive. In the second part decision making under risk in a social context is investigated. The results show that procedural considerations, such as the willingness to give other parties involved a fair chance to enjoy a good outcome, motivate non-selfish behavior in economic experiments. It is also shown, however, that such preference for equality of opportunity alone is not sufficient to explain the observed differences in support for income redistribution.