The Influence of Stress and Failure on Economic Decision Making: An Online Experiment

2020-06-03

2020-07-31

1) Altruism task: donation to charity (pooled estimation)
2) Risk taking task: indifference point
3) Intertemporal substitution task: quasi-hyperbolic model parameters (present bias beta and long-term discount rate delta)
4) Effort task: number of completed sliders

3) The quasi-hyperbolic model parameters will be calculated for each participant based on the indifference points in the two blocks of intertemporal substitution choices.

5) Altruism task: donations to the individual four charities (separately)
6) Altruism task: average donations across all four charities
7) Risk taking task: indicator variable for inconsistent choices
8) Intertemporal substitution task: indifference points (separately for the two choice blocks)
9) Intertemporal substitution task: model-free measure of present bias
10) Intertemporal substitution task: indicator variable for inconsistent choices

9) The model-free measure of present bias will be calculated as the difference between the indifference points in the t=3 vs t=6 and the t=0 vs t=3 choice blocks.

In the proposed study, we aim to distinguish the individual and combined influences of acute stress, failure and success on economic decision making using a behavioral online experiment.

Participants of the online experiment are asked to complete two experimental sessions, at least one week apart. During both sessions they complete four types of economic decision making tasks: (1) decisions on altruistic behaviors, (2) choices under risk, (3) intertemporal substitution choices, and (4) effort choices. Using a 2x3 experimental design, the decision environment is exogenously varied between participants as well as between the first and second sessions completed by each participant.

First, participants are assigned to complete an incentivized task aimed at inducing mild stress, either at the beginning of the first or of the second session they complete. This first experimental treatment introduces exogenous variation in the acute stress levels during the two sessions.

The incentive structure for the stress task involves a deduction from participants’ pay-off if they perform below an unknown threshold. With the second experimental treatment we vary the threshold level faced and the provision of feedback about participants’ performance relative to the threshold. Specifically, participants may receive either no feedback, feedback with a low threshold level (success condition) or feedback with a high threshold level (failure condition) prior to the economic decision making tasks in the second session they attend. This second experimental treatment introduces exogenous variation in perceived success or failure during the second session.

This experimental design allows us to compare economic decision outcomes in different decision environments, both between different participants and within the same participant across the two sessions. During the first session, participants will be making decisions either under acute stress or under control conditions. During the second session, participants will again be making decisions either under acute stress or under control conditions, additionally their decision environment is influenced by perceived success, perceived failure or neither.

A number of manipulation checks will allow us to confirm the influence of our experimental treatments. Participants’ perceptions of the task’s stressfulness and the self-reported state anxiety at different points during both sessions provide evidence on the psychological impact of the stress task. Participants’ perceived failure and their performance expectations after receiving (no) feedback allow us to assess the effectiveness of the failure and success conditions.

Randomization is done using the online platform hosting the experiment sessions (Qualtrics).

Randomization is done at the participant level.

No

300-400 participants

300-400 participants

50-65 participants

0.17 - 0.19 standard deviations for the impact of stress, of 0.30 - 0.34 standard deviations for the impact of failure, 0.41 - 0.47 standard deviations for the interaction of stress and failure.