Emotion, Decision, and Risk: Betting on Gambles versus Betting on People

We examined the effects of two emotions, fear and anger, on risk-taking behavior in two types of tasks: Those in which uncertainty is generated by a randomizing device ("lottery risk") and those in which it is generated by the uncertain behavior of another person ("person-based risk"). Participants first completed a writing task to induce fear or anger. They then made choices either between lotteries (Experiment 1) or between actions in risky two-person decisions (Experiments 2 and 3). The experiments involved substantial real-money payoffs. Replicating earlier studies (which used hypothetical rewards), Experiment 1 showed that fearful participants were more risk-averse than angry participants in lottery-risk tasks. However-the key result of this study-fearful participants were substantially less risk-averse than angry participants in a two-person task involving person-based risk (Experiment 2). Experiment 3 offered options and payoffs identical to those of Experiment 2 but with lottery-type risk. Risk-taking returned to the pattern of Experiment 1. The impact of incidental emotions on risk-taking appears to be contingent on the class of uncertainty involved. For lottery risk, fear increased the frequency of risk-averse choices and anger reduced it. The reverse pattern was found when uncertainty in the decision was person-based. Further, the effect was specifically on differences in willingness to take risks rather than on differences in judgments of how much risk was present. The impact of different emotions on risk-taking or risk-avoiding behavior is thus contingent on the type, as well as the degree, of uncertainty the decision maker faces.