Economics at your fingertips  

Cortisol meets GARP: the effect of stress on economic rationality

E. Cettolin (), Patricio Dalton (), W. J. Kop and W. Zhang
Additional contact information
E. Cettolin: Tilburg University
W. J. Kop: Tilburg University
W. Zhang: Tilburg University

Experimental Economics, 2020, vol. 23, issue 2, No 11, 554-574

Abstract: Abstract Rationality is a fundamental pillar of Economics. It is however unclear if this assumption holds when decisions are made under stress. To answer this question, we design two laboratory experiments where we exogenously induce physiological stress in participants and test the consistency of their choices with economic rationality. In both experiments we induce stress with the Cold Pressor test and measure economic rationality by the consistency of participants’ choices with the Generalized Axiom of Revealed Preference (GARP). In the first experiment, participants delay the decision-making task for 20 min until the cortisol level peaks. We find significant differences in cortisol levels between the stressed group and the placebo group which, however, do not affect the consistency of choices with GARP. In a second experiment, we study the immediate effect of the stressor on rationality. Overall, results from the second experiment confirm that rationality is not impaired by the stressor. If anything, we observe that compared to the placebo group, participants are more consistent with rationality immediately after the stressor. Our findings provide strong empirical support for the robustness of the economic rationality assumption under physiological stress.

Keywords: Economic rationality; GARP; Physiological stress; Cortisol (search for similar items in EconPapers)
JEL-codes: C90 C91 D01 D91 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Cortisol meets GARP: The Effect of Stress on Economic Rationality (2018) Downloads
Working Paper: Cortisol meets GARP: The Effect of Stress on Economic Rationality (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10683/PS2

DOI: 10.1007/s10683-019-09624-z

Access Statistics for this article

Experimental Economics is currently edited by David J. Cooper, Lata Gangadharan and Charles N. Noussair

More articles in Experimental Economics from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-01-24
Handle: RePEc:kap:expeco:v:23:y:2020:i:2:d:10.1007_s10683-019-09624-z