Countercyclical risk aversion can explain major puzzles such as the high volatility of asset prices. Evidence for its existence is, however, scarce because of the host of factors that simultaneously change during financial cycles. We circumvent these problems by priming financial professionals with either a boom or a bust scenario. Subjects primed with a financial bust were substantially more fearful and risk averse than those primed with a boom, suggesting that fear may play an important role in countercyclical risk aversion. The mechanism described here is relevant for theory and may explain self-reinforcing processes that amplify market dynamics.

The article discusses and analyzes data from several economic experiments in a household survey with mothers of preschool children. The researchers measured competitiveness by giving the subjects the choice between competing in a tournament or receiving a piece rate for a real effort task. The subjects also participated in lottery choices, which enabled the researchers to assess their risk preferences. The relationship between social preferences and competitiveness in the sample of mothers of preschool children was analyzed. The hypothesis that egalitarian subjects aren't as likely to self-select into competitive environments, which can produce winners and losers, was tested. A negative relationship between egalitarian choices and self-selection into competition was found.

In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies by Joseph Henrich, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr, Herbert Gintis and Richard McElreath. Published in volume 91, issue 2, pages 73-78 of American Economic Review, May 2001

This paper documents a large association between individuals’ time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences, and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory.