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Asia Pacific Journal of Management
Published in: Asia Pacific Journal of Management 1/2019

07-03-2018

Risk adaptation and emotion differentiation: An experimental study of dynamic decision-making

Authors: Yan Li, Neal M. Ashkanasy

Published in: Asia Pacific Journal of Management | Issue 1/2019

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Abstract

We report a study of risky decision-making in a dynamic risk environment, looking in particular at idea that variations in risk preferences over time are subject to both risk adaptation and ability to differentiate negative emotions. In a between-group experiment, 175 participants completed 20 binary project investment decisions under three objective probabilities of success conditions (20%, 50%, and 80%). The results showed that participants’ risk-taking increased at Time 2 only when risky projects have a medium-to-high chance of success (50% or 80%) at Time 1. We also found that participants who could differentiate their negative emotions under the condition with high favorability of risk-taking (80%), achieved higher returns, suggesting that negative emotion differentiation provides emotional information to capture the pattern of decision trials in the environment more favorable to risk-taking success. We conclude with a discussion of the theoretical and practical contributions of our findings for individuals and firms.
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Appendix
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Footnotes
1
The study was given approval by the University of Queensland Business and Social Sciences Ethical Review Committee.
 
2
Consistent with current practice in studies of dynamic learning, we adopted the paradigm set out by Andersen, Denrell, and Bettis (2007) and measured decision-making performance over the 20 tasks rather than for each decision.
 
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Metadata
Title
Risk adaptation and emotion differentiation: An experimental study of dynamic decision-making
Authors
Yan Li
Neal M. Ashkanasy
Publication date
07-03-2018
Publisher
Springer US
Published in
Asia Pacific Journal of Management / Issue 1/2019
Print ISSN: 0217-4561
Electronic ISSN: 1572-9958
DOI
https://doi.org/10.1007/s10490-017-9559-3

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