Are Risk and Time Preferences Related to Cognitive Preferences?
Loading...
Date
2024-12
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
The Ohio State University
Abstract
This paper investigates the relationship between an individual’s risk and time preference and their cognitive style, aiming to explore further the differences in risk and time preferences from the lens of cognitive preferences. While previous research has studied the effect of cognitive ability on time and risk preference, studies on the role of cognitive style, rather than strictly ability, have been largely neglected. 466 participants in the study took the questionnaire titled Cognitive Style Index (CSI), which categorizes participants into either the “intuition” or “analysis” cognitive style. A series of tasks evaluating the participant’s risk aversion and the discount value followed. I hypothesize a significant relationship between an individual’s cognitive style and risk and time preference, namely, individuals with the analysis cognitive style exhibit more risk-averse and patient behavior and vice versa. Evidence from the data aligns with the hypothesis but ultimately fails to provide statistically significant support. Nonetheless, the result will expand our current understanding of the underlying causes of risk and time preference, and contribute to the growing research on behavior economics.
Description
Keywords
Behavioral economics, Risk Preference, Time Preference, Temporal Discounting, Risk Aversion, Cognitive Style