Relating Cognitive Skills and Personality Traits to Economic Preferences: Decision-Making under Cognitive Shocks and Guessing

Cesar Chavez, Shuaizhang Feng, James Heckman and Zhe Yang

No 35526, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using rich data on Chinese schoolchildren, we study the relationships of IQ and personality traits with children’s risk preferences and how they affect the precision with which those preferences are measured. Our structural model separates preferences from deliberation noise and guessing, and relates guessing to deliberation noise. Psychological measures have weak direct influences on preferences but strongly affect deliberation noise and guessing behavior. Shocks to choice have persistent individual-specific components and are not independent. Socioeconomic background has little direct influence on preferences or deliberation noise once traits are accounted for. Background variables affect psychological traits, however. Risk preferences differ across and within genders. For small gambles, girls are less risk averse than boys, but the opposite holds for larger gambles.

JEL-codes: D12 D90 I21 J24 (search for similar items in EconPapers)
Date: 2026-07
Note: CH ED
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