Risk and rationality: The effects of mood and decision rules on probability weighting

► We investigate experimentally mood effects on risk taking behavior. ► We find strong gender differences in mood-sensitivity of risk aversion. ► Women in good mood are more optimistic than women in a normal mood state. ► Men are more likely to calculate expected values when assessing risky prospects. ► Applying such a decision rule makes men less susceptible to mood states. Empirical research has shown that people tend to overweight small probabilities and underweight large probabilities when valuing risky prospects, but little is known about factors influencing the shape of the probability weighting curve. Based on a laboratory experiment with monetary incentives, we demonstrate that pre-existing good mood is significantly associated with women’s probability weights: Women in a better than normal mood tend to weight probabilities relatively more optimistically. Many men, however, seem to be immunized against effects of incidental mood by applying a mechanical decision criterion such as maximization of expected value.