with Lubomir Cingl
Abstract: Many important decisions are made under stress and they often involve risky alternatives. There has been ample evidence that stress influences decision making in cognitive as well as in affective domains, but still very little is known about whether individual attitudes to risk change with exposure to acute stress. To directly evaluate the causal effect of stress on risk attitudes, we adopt an experimental approach in which we randomly expose participants to a psychosocial stressor in the form of a standard laboratory stress-induction procedure: the Trier Social Stress Test for Groups. Risk preferences are elicited using an incentive compatible task, which has been previously shown to predict risk-oriented behavior out of the laboratory. Using three different measures (salivary cortisol levels, heart rate and multidimensional mood questionnaire scores), we show that stress was successfully induced on the treatment group. Our main result is that acute psychosocial stress significantly increases risk aversion. The effect is mainly driven by males; men in our control group are less risk-averse than women, which is a standard result in the literature, but this difference almost disappears when under psychosocial stress.
with Lubomir Cingl and Ian Levely
Abstract: We study how psycho-social stress affects willingness to compete and performance under tournament incentives across gender. The work has implications for gender gaps on the labor market, since many key career events involve competition in stressful settings (e.g. entrance exams or job interviews). We use a laboratory economic experiment in which a task is compensated under both tournament and piece-rate schemes and elicit subjects‘ willingness to compete. Stress is exogenously introduced through a modified version of the Trier Social Stress Test, and stress response is measured by salivary cortisol levels. We find that stress reduces willingness to compete. For female subjects, this can be explained by performance: while tournament incentives increase output in the control group, women in the stress treatment actually perform worse when competition is introduced. For males, output is not affected by the stress treatment and lower competitiveness seems to be preference-based. These results may explain previous findings that men and women react differently to tournament incentives.
Abstract: Every year, millions of people move to a foreign country for school or work. This research provides evidence of how such international experience shifts preferences and stereotypes towards other nationalities. I use the largest study abroad program in the world—the Erasmus program—as a source of variation in international experience. Students about to participate in the Erasmus program are taken as a control group for students who have just returned. Individuals make decisions in a Trust Game and in a Triple Dictator Game to decompose changes to statistical discrimination from changes to taste-based discrimination. Results show that while students prior to an Erasmus stay do not differentiate between partners from Northern and Southern Europe in the Trust Game, students with Erasmus experience start to exhibit lower trust towards partners from the South. Behavior towards other nationalities in the Triple Dictator Game is not affected by Erasmus. Overall, the results suggest that participants learn about cross-country variation in cooperative behavior while abroad and therefore statistical discrimination becomes more relevant with increased international experience.