Cognitive Resource Depletion, Choice Consistency, and Risk Preferences (original) (raw)

Sleepiness, choice consistency, and risk preferences

Theory and Decision, 2016

Sleepiness, Choice Consistency, and Risk Preferences We investigate the consistency and stability of individual risk preferences by manipulating cognitive resources. Participants are randomly assigned to an experiment session at a preferred time of day relative to their diurnal preference (circadian matched) or at a nonpreferred time (circadian mismatched) and choose allocations between two risky assets (using the Choi et al., 2007, design). Consistency of behavior of circadian matched and mismatched subjects is statistically the same, however mismatched subjects tend to take more risks. We conclude that, consistent with several theories, preferences are rational yet can change depending on state-level cognitive resources.

of Labor Sleepiness, Choice Consistency, and Risk Preferences

2014

The effects of one night of sleep deprivation on known-risk and ambiguous-risk decisions

Journal of Sleep Research, 2007

Sleep deprivation has been shown to alter decision-making abilities. The majority of research has utilized fairly complex tasks with the goal of emulating 'real-life' scenarios. Here, we use a Lottery Choice Task (LCT) which assesses risk and ambiguity preference for both decisions involving potential gains and those involving potential losses. We hypothesized that one night of sleep deprivation would make subjects more risk seeking in both gains and losses. Both a control group and an experimental group took the LCT on two consecutive days, with an intervening night of either sleep or sleep deprivation. The control group demonstrated that there was no effect of repeated administration of the LCT. For the experimental group, results showed significant interactions of night (normal sleep versus total sleep deprivation, TSD) by frame (gains versus losses), which demonstrate that following as little as 23 h of TSD, the prototypical response to decisions involving risk is altered. Following TSD, subjects were willing to take more risk than they ordinarily would when they were considering a gain, but less risk than they ordinarily would when they were considering a loss. For ambiguity preferences, there seems to be no direct effect of TSD. These findings suggest that, overall, risk preference is moderated by TSD, but whether an individual is willing to take more or less risk than when well-rested depends on whether the decision is framed in terms of gains or losses.

Circadian effects on strategic reasoning

Experimental Economics, 2012

The ability to strategically reason is important in many competitive environments. Trait-level cognitive skills have been shown to affect strategic behavior, but important short-run temporal variations in state-level cognition are not uncommon. A common source of state-level cognition variability is sleepiness, which may result from sleep loss or circadian timing. In this paper, we examine how even mild temporal variations in cognition affect outcomes in the Beauty Contest, which has been shown to recruit the medial prefrontal cortex. Mild temporal variations in cognition are studied by examining ecologically valid sleep loss and circadian timing of the type found in naturally occurring decision settings. Our first result is that that voluntary sleep loss, as well as relatively mild circadian mismatch (decisions at one's off-peak time of day), harms subjects' strategic reasoning. However, a second result is that choice adaptation during repeated play is resilient to these adverse sleep states. This is consistent with the hypothesis that decisionmaking involving automatic thought is more resilient to cognitive resource depletion than controlled thought decision-making. These results demonstrate that even relatively mild levels of voluntary sleep loss, as well as adverse (but not extreme) times of day, can produce decrements in strategic reasoning that may harm successful adaptation to new competitive decision environments. Further analysis of our data also reveals evidence that higher-thanaverage levels of sleep harm strategic reasoning similar to low sleep levels, indicating that strategic reasoning is not monotonically improving in one's level of sleep. These results suggest that current trends in sleep habits and scheduling may be maladaptive and lead to suboptimal choices in decision environments where anticipation is important, such as in financial markets, driving commute choice, and threat assessment.

Sleep choice and circadian mismatch affects strategic reasoning

The ability to strategically reason is important many competitive environments. Trait-level cognitive skills have been shown to affect strategic behavior, but important temporal variations in state-level cognition are not uncommon. A common source of state-level cognition variability is sleepiness, which may result from sleep loss or circadian timing. We examine ecologically valid sleep and circadian effects on strategic reasoning, using a task that engages controlled thought areas of the medial prefrontal cortex (1) associated with mentalizing. Our first result is that that voluntary sleep loss, as well as relatively mild circadian mismatch, harms subjects' strategic reasoning. However, a second results is that choice evolution during repeated play is resilient, which is consistent with the hypothesis that automatic thought is more resilient to cognitive resource depletion than controlled thought processes (2). These results demonstrate that even relatively mild levels of voluntary sleep loss, as well as adverse (but not extreme) times of day, can produce decrements in strategic reasoning that may harm successful adaptation to new competitive environments. Further analysis of our data also reveals evidence that higherthan-average levels of sleep harm strategic reasoning similar to low sleep levels, indicating that strategic reasoning is not monotonically improving in one's level of sleep. These results suggest that current trends in sleep habits and scheduling may be maladaptive and lead to suboptimal choices in decision environments where anticipation is important, such as in financial markets, driving commute choice, and threat assessment.

On the Interaction of Risk and Time Preferences: An Experimental Study

German Economic Review, 2001

Experimental studies of risk and time preference typically focus on one of the two phenomena. The goal of this paper is to investigate the (possible) correlation between subjects' attitude to risk and their time preference. For this sake we ask 61 subjects to price a simple lottery in three different scenarios. At the first, the lottery premium is paid`now'. At the second, it is paid`later'. At the third, it is paid`even later'. By comparing the certainty equivalents offered by the subjects for the three lotteries, we test how time and risk preferences are interrelated. Since the time interval between`now' and`later' is the same as between`later' and`even later', we also test the hypothesis of hyperbolic discounting. The main result is a statistically significant negative correlation between subjects' degrees of risk aversion and their (implicit) discount factors. Moreover, we show that the negative correlation is independent of the method used to elicit certainty equivalents (willingness to pay versus willingness to accept).

HUMAN RISKY CHOICE UNDER TEMPORAL CONSTRAINTS: TESTS OF AN ENERGY‐BUDGET MODEL

Journal of the …, 2003

Risk-sensitive foraging models predict that choice between fixed and variable food delays should be influenced by an organism's energy budget. To investigate whether the predictions of these models could be extended to choice in humans, risk sensitivity in 4 adults was investigated under laboratory conditions designed to model positive and negative energy budgets. Subjects chose between fixed and variable trial durations with the same mean value. An energy requirement was modeled by requiring that five trials be completed within a limited time period for points delivered at the end of the period (block of trials) to be exchanged later for money. Manipulating the duration of this time period generated positive and negative earnings budgets (or, alternatively, ''time budgets''). Choices were consistent with the predictions of energy-budget models: The fixed-delay option was strongly preferred under positive earnings-budget conditions and the variable-delay option was strongly preferred under negative earnings-budget conditions. Within-block (or trial-by-trial) choices were also frequently consistent with the predictions of a dynamic optimization model, indicating that choice was simultaneously sensitive to the temporal requirements, delays associated with fixed and variable choices on the upcoming trial, cumulative delays within the block of trials, and trial position within a block.

Choice Reversal without Temptation: A Dynamic Experiment on Time Preferences!

2012

We study intertemporal choices through an experiment run over multiple dates and we show that intertemporal behavior is a¤ected by additional drivers beyond impatience and present-biased preferences. By eliciting a subject's plan and tracking its implementation over time, this dynamic design helps our understanding of time inconsistency through the identi…cation and measurement of three notions of choice reversal in intertemporal behavior. In the experiment, there is widespread choice reversal and demand for ‡exibility. Neither the usual exponential nor hyperbolic discounting models can account for the observed behavior.

Decisions under Time Pressure: How Time Constraint Affects Risky Decision Making

Organizational Behavior and Human Decision Processes, 1997

Subjects rated the attractiveness of and judged maximum buying prices for gambles which had some probability of winning a dollar amount, otherwise winning nothing. Change-of-process theory (Mellers, Chang, Birnbaum, & Ordó ñ ez, 1992; Mellers, Ordó ñ ez, & Birnbaum, 1992) asserts that decision makers multiply probability and amount information when stating buying prices but add this information when reporting attractiveness ratings. When subjects were placed under time constraint, however, some subjects' ratings were consistent with a multiplicative combination process. This result only occurred when these subjects performed the rating task under time constraint and had performed the buying price task in the previous set of trials. These subjects were less likely to engage in cognitive tasks, as measured by the Need for Cognition Scale (Cacioppo, Petty, & Kao, 1984). Apparently, the extra cognitive demands of the time constraint caused these subjects to use the same strategy employed in the previous task. When the time constraint was removed, these subjects appeared to switch back to an additive strategy. These changes in information processing produced predictable patterns of preference reversals. ᭧

Psychological and biological foundations of time preference: Evidence from a day reconstruction study with biological tracking

2008

This paper considers the relationship between the economic concept of time preference and relevant concepts from psychology and biology. Using novel data from a time diary study conducted in Ireland that combined detailed psychometric testing with medical testing and realtime bio-tracking, we examine the distribution of a number of psychometric measures linked to the economic concept of time preferences and test the extent to which these measures form coherent clusters and the degree to which these clusters are related to underlying biological substrates. The paper finds that financial discounting is related to a range of psychological variables including consideration of future consequences, self-control, conscientiousness, extraversion, and experiential avoidance as well as being predicted by heart rate variability and blood pressure.

Cognitive Resource Depletion, Choice Consistency, and Risk Preferences (original) (raw)

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