The influence of fear in decisions: Experimental evidence

  • Olivier Chanel
  • Graciela Chichilnisky


This article studies decisions made under conditions of fear, when a catastrophic outcome is introduced in a lottery. It reports on experimental results and seeks to compare the predictions of the expected utility (EU) framework with those of a new axiomatic treatment of choice under uncertainty that takes explicit account of emotions such as fear (Chichilnisky 1996, 2000, 2002, 2009). Results provide evidence that fear influences the cognitive process of decision-making by leading some subjects to focus excessively on catastrophic events. Such heterogeneity in subjects’ behavior, while not consistent with EU-based functions, is fully consistent with the new type of utility function implied by the new axioms.


Decision under risk Losses Catastrophic event Fear Probability weighting function 

JEL Classification

C91 D81 


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.CNRS-GREQAM-IDEPMarseille cedex 2France
  2. 2.Economics DepartmentColumbia UniversityNYUSA

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