Risk Seeking or Risk Averse? Phenomenology and Perception

We performed a large experiment (690 individuals), combining the Iowa Gambling Task (IGT) with Skin Conductance Response (SCR) measurement, with the aim of investigating the risk attitude of individuals. Interviewees were asked to sequentially choose the four decks of the IGT as if they were four financial assets in a portfolio selection framework, with the objective of maximizing their final wealth. The SCR was recorded during the whole experiment to measure the amount of emotion experienced by individuals. We removed assumptions on individual risk preference, and set two theoretical rules for choices: either minimize or maximize risk, for any given return. Risk is modeled by four alternative formulas, typically used by the financial industry. The portfolio Pareto efficiency is evaluated under two perspectives: either money, or a ``subjective value'' obtained combining money with emotions. We find dominance of risk-seeking behaviors, when they are observed through the phenomenology of money, independently from the formula used. Conversely, the same individuals appear risk averter, when values include their subjective experiences, and risk is modeled by a standard deviation formula. These results are consistent for sub-groups of individuals, specified by gender, age, education and profession. Implications are severe, proving unawareness of behavior under risk.