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

Published online by Cambridge University Press:  01 January 2025

Francesco Bogliacino Open the ORCID record for Francesco Bogliacino [Opens in a new window]  and
Felipe Montealegre
Francesco Bogliacino*
Affiliation:
Centro de Investigaciones para el Desarrollo, Universidad Nacional de Colombia, Bogotá, Colombia Facultad de Ciencias Economicas, Universidad Nacional de Colombia, Bogotá, Colombia
Felipe Montealegre
Affiliation:
Centro de Investigaciones para el Desarrollo, Universidad Nacional de Colombia, Bogotá, Colombia
*
e-mail: fbogliacino@unal.edu.co
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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.

Keywords

Cognitive functionCheatingSocial normLoss aversionNegative shockIncomeAsset

JEL classification

C91: Laboratory, Individual Behavior D81: Criteria for Decision-Making under Risk and Uncertainty D91: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Type
Original Paper
Information
Journal of the Economic Science Association , Volume 6 , Issue 1 , June 2020 , pp. 57 - 67
Copyright
Copyright © Economic Science Association 2020

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s40881-020-00091-4) contains supplementary material, which is available to authorized users.

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