Becker Friedman Institute

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Willingness to take risk: The role of risk conception and optimism

We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of personality and that it predicts real-life risk taking. The general risk question captures this disposition alongside pure risk preference. This enlightens why the general risk question is a better predictor of behavior under risk across different domains than measures of pure risk preference. Our results also rationalize why risk taking is related to optimism.

Authors: 
Thomas Dohmen, Universität Bonn
Simone Quercia, University of Bonn
Jana Willrodt, University of Duesseldorf
Publication Date: 
August, 2018
Publication Status: 
Document Number: 
2018-056
File Description: 
First version, June 1, 2018