Cognitive load increases risk aversion

Holger Gerhardt, Guido P. Biele, Hauke Heekeren and Harald Uhlig ()

No 2016-011, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: We investigate how stable individuals' risk attitudes are with respect to changes in cognitive load. In a laboratory experiment using pairwise lottery choice and a within-subject design, we showthat putting subjects under load via a concurrent working-memory task significantly increases their risk aversion. Subjects made significantly faster choices under load. Regardless of load, they responded faster when choosing the less risky option in safe-risky trials, but not in risky-risky trials. We discuss how these findings relate to both dual-system and unitarysystem theories of decision making.We observe that predictions of both recent dual-system and drift-diffusion models of the decision-making process are confirmed by our data and argue for a convergence of these to-date separate strands of the literature.

Keywords: risk aversion; cognitive load; working memory; dual-system approach; multiple-system approach; dual-self model; drift-diffusion model; response times (search for similar items in EconPapers)
JEL-codes: C91 D03 D81 D87 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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