Can Personality Type Explain Heterogeneity in Probability Distortions?

There are two regularities we have learned from experimental studies of choice under risk. The first is that the majority of people weigh objective probabilities non-linearly. The second regularity, although less commonly acknowledged, is that there is a large amount of heterogeneity in how people distort probabilities. Despite of this, little effort has been made to identify the source of heterogeneity. In this paper, we explore the possibility that personality type is linked to probability distortions. Using validated psychological questionnaires, we clustered participants into distinct personality types: motivated, impulsive, and affective. We found that the motivated viewed gambling more attractive, whereas the impulsive were the most capable of discriminating non-extreme probabilities. Our results suggest that the observed heterogeneity in probability distortions may be explained by personality profiles, which can be elicited though standard psychological questionnaires.