Cognitive Resource Depletion, Choice Consistency, and Risk Preferences

Marco Castillo (), David Dickinson and Ragan Petrie

No 1036, Working Papers from George Mason University, Interdisciplinary Center for Economic Science

Abstract: We investigate the consistency and stability of individual risk preferences by slightly manipulating the cognitive resources of subjects through sleepiness. Participants are recruited and randomly assigned to an experiment session at a preferred time of day relative to their diurnal preference (circadian matched) or at a non-preferred time of day (circadian mismatched). For the decision task, subjects and are asked to choose how much to allocate between two state-dependent assets (using the Choi et al., 2007, design). We have two main findings. First, the consistency of behavior for circadian matched and mismatched subjects is statistically the same. This is true whether it is (nonparametrically) defined as consistency with GARP, payoff dominance, expected utility, disappointment aversion or cumulative prospect theory. Second, while our cognitive resource manipulation yields no difference in consistency of behavior, it results in an increased tendency to take risk. Our experiment confirms theoretical predictions that preferences are consistent yet state-dependent. Length: 30

Keywords: risk preference; sleep; experiments. (search for similar items in EconPapers)
Date: 2012-11, Revised 2012-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.gmu.edu/schools/chss/economics/icesworkingpapers.gmu.edu/pdf/1036.pdf (application/pdf)

Related works:
Working Paper: Cognitive Resource Depletion, Choice Consistency, and Risk Preferences (2012)
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: https://EconPapers.repec.org/RePEc:gms:wpaper:1036

Access Statistics for this paper

More papers in Working Papers from George Mason University, Interdisciplinary Center for Economic Science Contact information at EDIRC.
Bibliographic data for series maintained by Shams Bahabib ().