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.
Deck, C. and Jahedi, S. (2015). “The Effect of Cognitive Load on Economic Decision Making: A Survey and New Experiments,” European Economic Review 78, August 2015, pp. 97-119. DOI: 10.1016/j.euroecorev.2015.05.004
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NOTICE: this is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Economic Review, volume 78, in 2015. DOI: 10.1016/j.euroecorev.2015.05.004
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