Exploring the Impact of Decision Speed on Risk Taking in Economics

This essay examines the impact of fast and slow decisions on risk-taking behavior within the framework of behavioral economics. It discusses how decision-making speed, influenced by factors like time pressure and time delay, affects risk aversion and risk-seeking tendencies. Drawing from the article 'The effect of fast and slow decisions on risk taking,' the essay highlights the importance of considering the nature of the decision when determining the appropriate pace. It also emphasizes the relevance of the dual-process model, which distinguishes between intuitive and deliberative decision-making. The essay concludes that time pressure significantly influences risk perception and that the effectiveness of a decision is contingent on the specific context and whether a quick or more researched approach is warranted, suggesting that inappropriate decisions can negatively impact outcomes.

Behavioural Economics and
Finance

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
REFERENCES................................................................................................................................6

MAIN BODY
Behavioural economics is the branch of economics which involves the study relating to
effects of cognitive, emotional, cultural, psychological and other decision of individuals. For
taking any kind of decision it is necessary for the person to evaluate and analyse the different
factors. The current essay will outline the discussion relating to the effects of the fast and slow
decision over the risk taking of the person.
With the analysis of the article ‘The effect of fast and slow decisions on risk taking’ it is
clear that the decision making is very important (The effect of fast and slow decisions on risk
taking, 2021). The reason pertaining to the fact that in case the decisions are not taken in proper
and effective manner then this might result in loss for the person of the company. along with this
it was also evaluated that the different types of financial and economic decisions are sometimes
taken fast and sometime slow. Hence, this affects the working and efficiency of the people. This
is particularly because of the reason that in case the decisions are not researched before finalising
then this will be impacting the work to a great extent.
The discussion further evaluated that the taking of decision depends on many different
aspects. Some of the decision can be taken quickly and some of them require a lot of research.
The reason pertaining to the fact is that some of the areas need a lot of research and some need to
be spontaneous so that there is not any loss for the person to incur. For instance, in case of
financial decision like selling of the shares or future and forward, then in that case there is not
any requirement for discussion and there need to be taken instant decision. This is necessary for
the reason that in case there will be delay while taking the decision than this may result in loss
for the company or the person.
On the other hand, in case the person or business is planning to invest their money in
some securities then in this case there need to be done a deeper analysis. The reason underlying
this fact is that when the person need to invest their money into some good option then they have
to analyse the various options. This is particularly because of the reason that there are different
sources of investment and all have their own benefits. In case the wrong option will be selected
then this will be impacting the working and investment yield of the business (Kirchler and et.al.,
2017). hence, whether the decision need to be taken in fast or slow manner is totally dependent
on the nature of the decision. This simply means that in case the decision is of instant nature then
it need to be quick or otherwise time can be taken for finalising the decision.

Further, the discussion of the article also evaluated that the use of dual process model is
very necessary while taking the decision in better and effective manner. As per this model the
person can choose between two decisions that is intuitive and deliberative. The former relates
with the much fast and effortless decision which involves deciding on instant basis (Lent and
Brown, 2020). On the other hand, the latter involves the taking of the decision in much slower
and more controlled manner by analysing all the different elements relating to the situation. In
the article it was also evaluated that the time pressure is the most crucial factor which decides the
pace of the decision making.
The decision need to be taken based on the time pressure only. Also in addition to this,
the time delay also plays a crucial role while taking the decision. In case the time pressure is high
then the risk relating to the decision will also be high. The reason pertaining to the fact is that
when decision need to be taken in fixed time duration then this will not provide much time to
research. hence, it is not necessary that the decision taken will be correct or not. Along with this
the time delay also plays a crucial factor at time of taking the decision. The reason underlying
this fact is that in case the time delay is high then the quality of the decision may be impacted.
The overall article evaluated and concluded the fact that the time pressure is being
created at time of decision making. This is pertaining to the fact that in case the time pressure
will not be taken into consideration then decision will be affected (Sol and et.al., 2018). The
study also evaluated that the time pressure always leads to the risk for the people taking the
decision. The reason underlying this fact is that in case the person is taking pressure than this
will negatively impact the working efficiency of the company or the person. Moreover, the
article also analysed that the time pressure creates more impact over the decision making in
comparison to the time delay. The reason underlying this fact is that in case the time delay is
there then this will not be impacting the business decision. On the other hand, in case the
decision will be based on time pressure then this will be affected and result may come in
negative in case the decision is not taken in proper and effective manner.
In the end the above essay evaluated the fact that the decision to be taken need to be very
appropriate. This is necessary because in case the decision is not good then this can affect the
working of the company or the person (El Haji and et.al., 2019). Along with this the above
discussion also evaluated that the use of fast or slow decision is totally dependent over the
situation and its nature. In case the situation demands quick decision then it will be fast. On the

other hand, in case the situation demands decision to be taken by more research then it will be
slow.

REFERENCES
Books and Journals
El Haji, A., and et.al., 2019. Time pressure and risk taking in auctions: A field
experiment. Journal of behavioral and experimental economics. 78. pp.68-79.
Kirchler, M., and et.al., 2017. The effect of fast and slow decisions on risk taking. Journal of
Risk and Uncertainty. 54(1). pp.37-59.
Lent, R. W. and Brown, S. D., 2020. Career decision making, fast and slow: Toward an
integrative model of intervention for sustainable career choice. Journal of Vocational
Behavior. 120. p.103448.
Sol, D., and et.al., 2018. Risk-taking behavior, urbanization and the pace of life in
birds. Behavioral Ecology and Sociobiology. 72(3). pp.1-9.
Online
The effect of fast and slow decisions on risk taking. 2021. [Online]. Available through: <
https://www.researchgate.net/publication/317618024_The_effect_of_fast_and_slow_decisi
ons_on_risk_taking >