Ego-Depletion and Financial Risk Behavior: An Experimental Analysis

Abstract

The present research investigates the ways in which the financial risk preferences of young adults are influenced by situational changes the level of their inhibitory abilities. As part of the research, young adults were asked to respond to a questionnaire dealing with their risk preferences. Some were asked to do a Stroop task before filling the questionnaire while others performed a similar but easier task. The study assumes that since the performance of the Stroop mission requires the individual to reach a decision while overcoming his automatic tendencies and habits, this will deplete his self-control resources. As such, when an individual is filling out the questionnaire dealing with risk preferences after a Stroop task, his ability to avoid automatic tendencies is depleted. The study found differences in the risk preferences of individuals who had experienced depletion, comparing to individuals who had not.

Keywords: risk preferences, ego-depletion

JEL Classification: I12