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Sleepiness, choice consistency, and risk preferences

Author

Listed:
  • Marco Castillo

    (Texas A & M University)

  • David L. Dickinson

    (Appalachian State University
    IZA
    ESI, Chapman University)

  • Ragan Petrie

    (Texas A & M University)

Abstract

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 non-preferred time (circadian mismatched) and choose allocations between two risky assets [using the Choi et al. (Am Econ Rev 27(5):1921–1938, 2007), design]. We find that choices of circadian matched and mismatched subject are statistically similar in terms of satisfying basic requirements for preference consistency. However, mismatched subjects tend to choose riskier asset bundles.

Suggested Citation

  • Marco Castillo & David L. Dickinson & Ragan Petrie, 2017. "Sleepiness, choice consistency, and risk preferences," Theory and Decision, Springer, vol. 82(1), pages 41-73, January.
    • Handle: RePEc:kap:theord:v:82:y:2017:i:1:d:10.1007_s11238-016-9559-7
    DOI: 10.1007/s11238-016-9559-7
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    Cited by:

    1. David L. Dickinson & Andrew R. Smith & Robert McClelland, 2019. "An Examination of Circadian Impacts on Judgments," Working Papers 19-11, Department of Economics, Appalachian State University.
    2. Bazzani, Claudia & Nayga, Rodolfo M. Jr. & Caputo, Vincenzina, "undated". "Does circadian rhythm affect consumer evaluation for food products? An experimental study," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261215, Agricultural and Applied Economics Association.
    3. Dickinson, David L. & McElroy, Todd, 2019. "Bayesian versus heuristic-based choice under sleep restriction and suboptimal times of day," Games and Economic Behavior, Elsevier, vol. 115(C), pages 48-59.
    4. Dickinson, David L. & Chaudhuri, Ananish & Greenaway-McGrevy, Ryan, 2017. "Trading While Sleepy? Circadian Mismatch and Excess Volatility in a Global Experimental Asset Market," IZA Discussion Papers 10984, Institute of Labor Economics (IZA).
    5. Dickinson, David L. & McEvoy, David M. & Bruner, David M., 2022. "The impact of sleep restriction on interpersonal conflict resolution and the narcotic effect," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 71-90.
    6. Carrillo, Juan & Brocas, Isabelle & Combs, T. Dalton, 2015. "Consistency in Simple vs. Complex Choices over the Life Cycle," CEPR Discussion Papers 10457, C.E.P.R. Discussion Papers.
    7. David L. Dickinson, 2020. "Deliberation Enhances the Confirmation Bias in Politics," Games, MDPI, vol. 11(4), pages 1-25, November.
    8. E. Cettolin & P. S. Dalton & W. J. Kop & W. Zhang, 2020. "Cortisol meets GARP: the effect of stress on economic rationality," Experimental Economics, Springer;Economic Science Association, vol. 23(2), pages 554-574, June.
    9. Andreas C Drichoutis & Rodolfo M Nayga, 2020. "Economic Rationality under Cognitive Load," The Economic Journal, Royal Economic Society, vol. 130(632), pages 2382-2409.
    10. Emil Persson & Kinga Barrafrem & Andreas Meunier & Gustav Tinghög, 2019. "The effect of decision fatigue on surgeons' clinical decision making," Health Economics, John Wiley & Sons, Ltd., vol. 28(10), pages 1194-1203, October.
    11. David L. Dickinson, 2018. "An exploratory study of how sleep restriction impacts choice in two classic normal form games," Working Papers 18-02, Department of Economics, Appalachian State University.
    12. Castillo, Marco & Dickinson, David L., 2022. "Sleep restriction increases coordination failure," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 358-370.
    13. David L. Dickinson & Ananish Chaudhuri & Ryan Greenaway-McGrevy, 2020. "Trading while sleepy? Circadian mismatch and mispricing in a global experimental asset market," Experimental Economics, Springer;Economic Science Association, vol. 23(2), pages 526-553, June.
    14. Brocas, Isabelle & Carrillo, Juan D. & Combs, T. Dalton & Kodaverdian, Niree, 2019. "Consistency in simple vs. complex choices by younger and older adults," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 580-601.
    15. Michele Garagnani, 2023. "The predictive power of risk elicitation tasks," Journal of Risk and Uncertainty, Springer, vol. 67(2), pages 165-192, October.
    16. Hardardottir, Hjördis, 2019. "Many Balls in the Air Make Time Fly: The Effect of Multitasking on Time Perception and Time Preferences," Working Papers 2019:11, Lund University, Department of Economics, revised 17 Sep 2019.

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    More about this item

    Keywords

    Risk aversion; Rationality; Cognitive resource depletion; Choice consistency; Sleepiness;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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