Stress and Risk - Preferences and Noise

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See all articles by Elle Parslow

Elle Parslow

Stockholm School of Economics - Department of Economics

Julia Elisabeth Rose

Burgundy School of Business

Date Written: November 16, 2020


We analyze the impact of acute stress on risky choice in a laboratory experiment with 194 participants. We disentangle errors in decision making from an actual shift in preferences between our experimental treatments without the induction of stress and under stress. Our findings reveal that preferences are stable across conditions. Noise is very low and not significantly different between conditions. Structural estimations show that the noise in decision making mostly stems from errors of a Fechner structure. Additionally, we find statistically significant evidence for lower cognitive abilities being correlated with more noise in decision-making in general, however, independent of treatment.

Keywords: risk preferences, risk aversion, stress, laboratory stressor, Trier social stress test, cortisol

JEL Classification: C91, D81, D87

Suggested Citation

Parslow, Elle and Rose, Julia Elisabeth, Stress and Risk - Preferences and Noise (November 16, 2020). Available at SSRN:

Elle Parslow

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm

Julia Elisabeth Rose (Contact Author)

Burgundy School of Business ( email )

29 Rue Sambin
Dijon, 21000

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