The Effect of Cognitive Load on Economic Decision Making
By Cary A. Deck, Salar Jahedi. 2015
247 citations recorded by the source corpus.
Psychologists and economists have examined the effect of cognitive load in a variety of situations from risk taking to snack choice. We review previous experiments that have directly manipulated cognitive load and summarize their findings. We report the results of two new experiments where participants engage in a digit-memorization task while simultaneously performing a variety of economic tasks including: (1) choices involving risk, (2) choices involving intertemporal substitution, (3) choices with anchoring effects, (4) choices over healthy and unhealthy snacks, and (5) math problems. We find that higher cognitive load reduces numeracy as measured by performance in math problems. Moreover, within-subject analysis indicates that cognitive load leads to more risk-averse behavior, more impatience over money, and (nominally) more likelihood to anchor. We do not find any evidence that cognitive load increases impatience over consumption goods or unhealthy snack choices. Exploiting the panel nature of our data set, we find that those individuals who are most sensitive to cognitive load, as measured by a large drop in their own math performance across 1- and 8-digit memorization treatments, are driving much of the effect.
Subfields: Finance, General Decision Sciences, Safety Research
View Paper: https://www.semanticscholar.org/paper/268abbc1b38f9a5a8a7526acd579e5b91b781e49
Citations in the corpus
- Cognitive Imprecision and Small-Stakes Risk Aversion (2018, unknown): “1) is estimated for each of the six values of C, as in Figure 2.(18) In the case of the scale-invariant model, Nobs is the total number of observations in the calibration dataset, pooling the data for all six values of C, and there are k = 2 free parameters in the single model fit to all of these da”
- Financial literacy and fraud detection* (2019, unknown): “For example, Mani et al. (2013), Haushofer & Fehr (2014), Deck & Jahedi (2015), Schilbach et al. (2016) show that economic decisions worsen with increases in cognitive load.”