Motivating risky choices increases risk taking.

Abstract

We study the impact of the mode of cognition on risk taking. In an online experiment, we ask participants to make a simple decision involving risk by performing the bomb risk elicitation task. The control group undergoes no manipulation, while in the treatment group, we exogenously manipulate the mode of cognition by requiring subjects to write down a text that motivates their risky choice before making a decision. Such motivation treatment is meant to induce more reflection upon the action to be taken. Our results show an effect of the motivation treatment on risk taking, suggesting that higher reflection makes subjects more prone to risk taking. The effect is stronger among participants who have a limited understanding of the probability distribution involved in the decision task. Based on these findings, we suggest that reflection and comprehension may be substitutes in decision making when there is risk involved.