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How people respond to risk after being exposed to the risk of loss: An experimental study

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  • Dong, Zhiqiang
  • Guo, Yuchen
  • Zhao, Jun

Abstract

This study examines the effect of prior risk exposure on subsequent risk-taking behaviors. We perform laboratory-based experiments to distinguish the effect of the risk environment per se from that of the realized outcome of events. Unlike He and Hong (2018), who focus on the gain domain, we investigate people's risk-taking behaviors in both the loss and gain domain after being exposed to the risk of loss. Results indicate that prior exposure to high risk of loss leads to increased risk-seeking in the loss domain, but has no effect on subsequent risk-taking behaviors in the gain domain.

Suggested Citation

  • Dong, Zhiqiang & Guo, Yuchen & Zhao, Jun, 2022. "How people respond to risk after being exposed to the risk of loss: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    • Handle: RePEc:eee:soceco:v:97:y:2022:i:c:s2214804322000210
    DOI: 10.1016/j.socec.2022.101845
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    References listed on IDEAS

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