Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245730 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14679
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Large, macroeconomic shocks in the past have been shown to influence economic decisions in the present. We study in an experiment with 743 subjects whether small-scale, seemingly negligible, events also affect the formation of risk preferences. In line with a reinforcement learning model, we find that subjects who won a random lottery took significantly more risk in a second lottery almost a year later. The same pattern emerges in another experiment with 136 subjects where the second lottery was played more than three years after the first lottery. So, small-scale, random, events affect the formation of risk preferences significantly.
Subjects: 
reinforcement learning
risk preferences
preference formation
experiment
JEL: 
C91
D01
D83
Document Type: 
Working Paper

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