DEEP Sleep: The Impact of Sleep on Financial Risk Taking

31 Pages Posted: 14 Aug 2017 Last revised: 26 Apr 2018

See all articles by John R. Nofsinger

John R. Nofsinger

University of Alaska Anchorage

Corey A. Shank

Dalton State College - Division of Business Administration

Date Written: April 17, 2018

Abstract

In this paper, we examine the relationship between sleep and financial risk taking. The results indicate that individuals who have better sleep display less distortion of probability, are less susceptible to the present bias, and have a lower discounting rate. Specifically, individuals with better self-reported sleep quality have less distortion of probability, a more curved utility function, and are less loss averse, while those with fewer sleep disturbances display less probability distortion and have more curvature in their utility function. Overall, the results show that there are cognitive deficits in financial decision making by having poor sleep habits that can have important consequences.

Keywords: Risk Taking, Loss Aversion, Present Bias, Probability Distortion, Sleep

JEL Classification: G02, I10

Suggested Citation

Nofsinger, John R. and Shank, Corey, DEEP Sleep: The Impact of Sleep on Financial Risk Taking (April 17, 2018). Available at SSRN: https://ssrn.com/abstract=3017965 or http://dx.doi.org/10.2139/ssrn.3017965

John R. Nofsinger

University of Alaska Anchorage ( email )

3211 Providence Drive
Anchorage, AK 99508
United States

HOME PAGE: http://faculty.cbpp.uaa.alaska.edu/jnofsinger/

Corey Shank (Contact Author)

Dalton State College - Division of Business Administration ( email )

Dalton, GA 30720
United States

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