WHO IS 'BEHAVIORAL'? COGNITIVE ABILITY AND ANOMALOUS PREFERENCES

J Eur Econ Assoc. 2013 Dec 1;11(6):1231-1255. doi: 10.1111/jeea.12055.

Abstract

In this paper, we ask whether variation in preference anomalies is related to variation in cognitive ability. Evidence from a new laboratory study of Chilean high-school students with similar schooling backgrounds shows that small-stakes risk aversion and short-run discounting are less common among those with higher standardized test scores. The relationship with test scores survives controls for parental education and wealth. We find some evidence that elementary-school GPA is predictive of preferences measured at the end of high school. Two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences. (JEL: J24, D14, C91).