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

Liam Delaney, Günther Fink, Colm Harmon

Research output: Working paper

Abstract

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.
Original languageEnglish
PublisherIZA
Number of pages33
Publication statusPublished - Mar 2014

Keywords

  • risk aversion
  • discounting
  • financial decisions
  • stress
  • learning

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