Households are frequently subject to income and asset shocks. We performed a lab experiment, inducing losses on a real effort task, after which we measured cognitive performance, loss aversion and cheating behavior. We found that asset losses, but not income losses, act as a cognitive load, by decreasing accuracy and increasing response times. We did not detect any change in dishonesty or loss aversion.
Bogliacino, F., Montealegre, F., Do negative economic shocks affect cognitive function, adherence to social norms and loss aversion?, <<JOURNAL OF THE ECONOMIC SCIENCE ASSOCIATION>>, 2020; 6 (1): 57-67. [doi:10.1007/s40881-020-00091-4] [https://hdl.handle.net/10807/283896]
Do negative economic shocks affect cognitive function, adherence to social norms and loss aversion?
Bogliacino, Francesco;
2020
Abstract
Households are frequently subject to income and asset shocks. We performed a lab experiment, inducing losses on a real effort task, after which we measured cognitive performance, loss aversion and cheating behavior. We found that asset losses, but not income losses, act as a cognitive load, by decreasing accuracy and increasing response times. We did not detect any change in dishonesty or loss aversion.
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