Acute Stress Modulates Risk Taking in Financial Decision Making

Abstract

People's decisions are often susceptible to various demands exerted by the environment, leading to stressful conditions. Although a goal for researchers is to elucidate stress-coping mechanisms to facilitate decision-making processes, it is important to first understand the interaction between the state created by a stressful environment and how decisions are performed in such environments. The objective of this experiment was to probe the impact of exposure to acute stress on financial decision making and examine the particular influence of stress on decisions with a positive or negative valence. Participants' choices exhibited a stronger reflection effect when participants were under stress than when they were in the no-stress control phase. This suggests that stress modulates risk taking, potentially exacerbating behavioral bias in subsequent decision making. Consistent with dual-process approaches, decision makers fall back on automatized reactions to risk under the influence of disruptive stress.