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Saturday, March 29, 2014

Effects of stress on economic decision-making: Evidence from laboratory experiments

The abstract for my new paper with Gunther Fink (Harvard) and Colm Harmon (Sydney) is below. The working paper is available on this link. The paper examines the effect of experimentally-induced stress on participants risk preferences, time preferences and exploratory learning behaviour.


Effects of stress on economic decision-making: Evidence from laboratory experiments

The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the cold pressor task as a physiological stressor, and a series of intelligence tests as cognitive stressors, we find that stress increases subjective discounting rates, has no effect on the degree of risk-aversion, and substantially lowers the effort individuals make to learn about financial decisions.

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