The effect of cognitive load on economic decision making: A survey and new experiments

Abstract

Psychologists and economists have examined the effect of cognitive load in a variety of situations from risk taking to snack choice. We review previous experiments that have directly manipulated cognitive load and summarize their findings. We report the results of two new experiments where participants engage in a digit-memorization task while simultaneously performing a variety of economic tasks including: (1) choices involving risk, (2) choices involving intertemporal substitution, (3) choices with anchoring effects, (4) choices over healthy and unhealthy snacks, and (5) math problems. We find that higher cognitive load reduces numeracy as measured by performance in math problems. Moreover, within-subject analysis indicates that cognitive load leads to more risk-averse behavior, more impatience over money, and (nominally) more likelihood to anchor. We do not find any evidence that cognitive load increases impatience over consumption goods or unhealthy snack choices. Exploiting the panel nature of our data set, we find that those individuals who are most sensitive to cognitive load, as measured by a large drop in their own math performance across 1-and 8-digit memorization treatments, are driving much of the effect. * The authors wish to thank

The Psychological Lives of the Poor

“…Economists have applied these ideas to more standard economic tasks, such as small-stakes risk aversion or monetary discounting, typically finding an impact of diminished bandwidth (Deck and Jahedi 2015). Similar results have been found in many other decisions that rely on cognitive capacity and executive control, such as food choice.…”

The effects of outcome unit framing on delay discounting

“…Third, translating a fuzzy‐framed handful of quarters into a clear‐framed objective amount of dollars requires additional calculations. Previous findings indicate that as the required cognitive resources of evaluating a choice increase, the propensity for impulsive decision making increases (Deck & Jahedi, ). This finding has been extended to delay discounting.…”

Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests

“…Reading the instructions in each experimental session took much time, giving participants plenty of opportunity to think over their decisions even before they could actually input their decision into the computer. One could also use experimental manipulations, such as cognitive load (e.g., Cornelissen et al, 2011;Benjamin et al, 2013;Duffy and Smith, 2014;Deck and Jahedi, 2015) or time pressure (e.g., Rand et al, 2015), to directly examine how impulsivity drives overbidding in rent-seeking contests.…”

“…Other methods used by behavioral researchers rely on the analysis of reaction time (e.g., Rubinstein, 2007Rubinstein, , 2013Piovesan and Wengström, 2009;Rand et al, 2012), and the use of experimental manipulations, such as cognitive load (e.g., Cornelissen et al, 2011;Benjamin et al, 2013;Duffy and Smith, 2014;Deck and Jahedi, 2015) or time pressure (e.g., Rand et al, 2015). 18 The responses to the CRT are indeed a good proxy for the individuals' tendency to make impulsive versus reflective decisions.…”