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Do negative economic shocks affect cognitive function, adherence to social norms and loss aversion?

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  • Francesco Bogliacino

    (Universidad Nacional de Colombia
    Universidad Nacional de Colombia)

  • Felipe Montealegre

    (Universidad Nacional de Colombia)

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.

Suggested Citation

  • Francesco Bogliacino & Felipe Montealegre, 2020. "Do negative economic shocks affect cognitive function, adherence to social norms and loss aversion?," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(1), pages 57-67, June.
  • Handle: RePEc:spr:jesaex:v:6:y:2020:i:1:d:10.1007_s40881-020-00091-4
    DOI: 10.1007/s40881-020-00091-4
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    Cited by:

    1. Yun Zhang & Qun Wu & Ting Zhang & Lingxiao Yang, 2022. "Vulnerability and fraud: evidence from the COVID-19 pandemic," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-12, December.
    2. Cristiano Codagnone & Francesco Bogliacino & Camilo Gómez & Frans Folkvord & Giovanni Liva & Rafael Charris & Felipe Montealegre & Francisco Lupiañez Villanueva & Giuseppe A. Veltri, 2021. "Restarting “Normal” Life after Covid-19 and the Lockdown: Evidence from Spain, the United Kingdom, and Italy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(1), pages 241-265, November.
    3. Francesco Bogliacino & Cristiano Codagnone & Frans Folkvord & Francisco Lupiáñez-Villanueva, 2023. "The impact of labour market shocks on mental health: evidence from the Covid-19 first wave," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(3), pages 899-930, October.
    4. Castillo, Jose Gabriel & Hernandez, Manuel A., 2023. "The unintended consequences of confinement: Evidence from the rural area in Guatemala," Journal of Economic Psychology, Elsevier, vol. 95(C).

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    More about this item

    Keywords

    Cognitive function; Cheating; Social norm; Loss aversion; Negative shock; Income; Asset;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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