Silvia Angerer, UMIT, University for Health Sciences
What shapes children’s decisions? Experience or (selected) memory?
Abstract
Risk preferences play a central role in understanding economic choices, yet the determinants underlying the degree to which they are mutable remain unknown. Additionally, little is known about the effects of small-scale outcomes on subsequent choices, even though such outcomes make up the bulk of day-to-day experiences. Using a lab-in-the-field design with 1,122 children aged 7-11 years old, we investigate whether a contemporaneous choice in a risky lottery is shaped by the outcome of a lottery played ten months prior. We take advantage of the randomly assigned win/lose outcome from the first choice to test if the experience or if the memory of the outcome in the first lottery predicts choices in the second lottery. We find that subjects who won the first lottery make riskier choices in the second one. This effect is driven by those who are relatively more risk averse. We find no additional effect of incorrect beliefs about the first outcome, but we show that good outcomes (winning the first lottery) are more likely to be remembered correctly and that bad outcomes are more likely to be mis-remembered, which supports the notion that memories are used as a consumption good.
Silvia Angerer is a postdoctoral researcher at the Institute for Management and Economics in Healthcare at the UMIT in Hall in Tyrol.
Her main research interests lie in Behavioral and Experimental Economics, Health Economics and in the Economic Behavior of Children.