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The Emotional Information Processing System is Risk Averse: Ego-Depletion and Investment Behavior

Author

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  • de Langhe, B.
  • Sweldens, S.
  • van Osselaer, S.M.J.
  • Tuk, M.A.

Abstract

Two experiments show that a shortage of self-regulatory resources results in more risk aversion in mixed-gamble (gain/loss) situations. The findings support a dual process view that distinguishes between a rational and an affective information processing system, in which self-regulatory resources are the necessary fuel for the rational system. Depending on the expected values of risk seeking versus risk averse behavior, ego depletion can have negative (experiment 1) as well as positive (experiment 2) consequences for investment behavior.

Suggested Citation

  • de Langhe, B. & Sweldens, S. & van Osselaer, S.M.J. & Tuk, M.A., 2008. "The Emotional Information Processing System is Risk Averse: Ego-Depletion and Investment Behavior," ERIM Report Series Research in Management ERS-2008-064-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:13614
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    References listed on IDEAS

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    1. Kathleen D. Vohs & Ronald J. Faber, 2007. "Spent Resources: Self-Regulatory Resource Availability Affects Impulse Buying," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 33(4), pages 537-547, January.
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    4. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    5. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
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    Cited by:

    1. Friehe, Tim & Schildberg-Hörisch, Hannah, 2017. "Self-control and crime revisited: Disentangling the effect of self-control on risk taking and antisocial behavior," International Review of Law and Economics, Elsevier, vol. 49(C), pages 23-32.
    2. Hurley, Patrick J., 2015. "Ego depletion: Applications and implications for auditing research," Journal of Accounting Literature, Elsevier, vol. 35(C), pages 47-76.
    3. Lucks, Konstantin, 2016. "The Impact of Self-Control on Investment Decisions," MPRA Paper 73099, University Library of Munich, Germany.
    4. Sekścińska, Katarzyna & Rudzinska-Wojciechowska, Joanna & Jaworska, Diana, 2021. "Self-control and financial risk taking," Journal of Economic Psychology, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    ego depletion; emotional information processing system; investment behavior; risk averse;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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