Abstract
Psychological research links good (bad) mood with increased (decreased) risk aversion. This relation has been widely documented in experimental setups. There has not been, however, a complementary analysis with real-life decisions data. This paper fills this gap by testing the relation between mood and risk attitude in capital markets. To shed light on that relation, we recover risk preferences from capital market data and employ accumulated evidence suggesting that people's mood is correlated with weather conditions. Corroborating established experimental evidence, we find that good (bad) mood is associated with investors being less (more) willing to tolerate risk.
Original language | English |
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Pages (from-to) | 573-584 |
Number of pages | 12 |
Journal | Journal of Economic Behavior and Organization |
Volume | 52 |
Issue number | 4 |
DOIs | |
State | Published - 1 Dec 2003 |
Keywords
- Mood
- Risk preferences
- Weather
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management