Stress and risk — Preferences versus noise

Abstract

We analyze the impact of acute stress on risky choice in a pre-registered laboratory experiment with 194 participants. We test the causal impact of stress on the stability of risk preferences by separating noise in decision-making from an actual shift in preferences. We find no significant differences in risk attitudes across conditions on the aggregate, using both descriptive analyses as well as structural estimations for risk aversion and different noise structures. Additionally, in line with the previous literature, we find statistically significant evidence for lower cognitive abilities being correlated with more noise in decision-making in general. We do not find a significant interaction effect between cognitive abilities and stress on noise levels.

Keywords

• risk preferences
• risk aversion
• stress
• laboratory stressor
• Trier social stress test
• cortisol